Final answer:
A true statement concerning stock dividends is that corporations may use stock dividends instead of or in addition to cash dividends. Stock dividends are additional shares given to existing stockholders and represent a share of a company's profits, which can be paid out to shareholders. This rewards shareholders and is an alternative to cash dividends or capital gains.
Step-by-step explanation:
The true statement concerning stock dividends is: Corporations may use stock dividends instead of or in addition to cash dividends. A stock dividend occurs when a corporation declares and issues additional shares of its own stock to its existing stockholders. It's a way for a company to reward shareholders without distributing cash. When a firm decides to issue stock, it must recognize that investors will expect a rate of return that can come in the form of either dividends or capital gains.
Dividends represent a share of the profits a company has earned and are paid out to company shareholders. Stable companies, such as Coca-Cola and electric companies, often offer dividends on their stocks, and shareholders may hold these stocks for years.
Firms have to make a critical decision about the distribution of profits; they can choose to pay dividends, reinvest them in the business, or do a combination of both. Decisions about issuing stock, paying dividends, or reinvesting profits depend on several factors, including the firm's growth prospects, financial health, and shareholders' preferences.