Final answer:
The answer to the student's question about the type of dividend that returns a portion of the shareholders' original capital investments is a Liquidating dividend.
Step-by-step explanation:
A dividend is a payment made by a company to its shareholders as a return on their investment in the company's equity. The dividend represents a portion of the company's profits that is distributed to shareholders, and the amount each shareholder receives is typically based on the number of shares they own. For instance, if a stock pays a dividend of 75 cents per share, a shareholder owning 85 shares would receive a dividend payment totaling $63.75.
One type of dividend is known as a liquidating dividend, which is a return to shareholders of a portion of their original capital investment in the company. This type of dividend is paid out from the capital base of the company, rather than from its earnings or profits. When a company pays a liquidating dividend, it may indicate that the company is reducing its assets or that it is in the process of dissolving Therefore, the correct answer to the student's question is (d) Liquidating dividend. This type of dividend is a return to shareholders of a portion of their original capital investments, and is different from regular dividends that are paid out from company profits.