Question

Farrah owns 5,000 shares of stock in DAS, Inc. with a market value of $15,000. DAS declares a 20% stock dividend. After the dividend is paid, Farrah owns :

a. 5,000 shares with a market value of $18,000.

b. 6,000 shares with a market value of $15,000.

c. 6,000 shares with a market value of $18,000.

d. 5,100 shares with a market value of $15,300.

Answer 1

Number of shares own will be 6000 and market value will be $15000

So option (b) will be the correct option

Step-by-step explanation:

We have given that Farrah owns 5000 shares with a market value of $15000

Now it is declare that dividend = 20 % stock dividend

Now after the dividend paid number of shares own by Farrah
`=5000* 1.2=6000`

As the dividend has only effect on number of shares own so the market value will be the same as $15000

So number of shares own will be 6000 and market value will be $15000

So option (b) will be the correct option