If a corporation declares a 10% stock dividend, then the share price of the stock will...

If a corporation declares a 10% stock dividend, then

		the share price of the stock will most likely decline by about 9%.
		the share price of the stock will most likely increase by about 10%.
		the share price of the stock will most likely remain unchanged.
		each shareholder will get a 10% cash rebate off his or her next round lot purchase of the stock.

Expert Solution

When the corporation is declaring a 10% stock dividend, it will be in that shareholders will be gaining an additional stock for 10 stock already held in his portfolio, so the overall share price of the company is going to decrease because of presence of an additional stock in the portfolio.

Hence, If the corporation is declaring a 10% stock dividend, then, the price of this stock will most likely declined by about 9% because of increase in the overall number of shares.

Correct answer will be option (A) the share price of the stock will most likely decline by about 9%.

jeff jeffy answered 2 years ago

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