Final answer:
Dividends are distributions of a corporation's profits to its stockholders, with the amount based on the number of shares owned. These are decided by the company's board of directors and are common among stable publicly traded companies. The correct option is A.
Step-by-step explanation:
Distributions of a corporation's earnings to stockholders are known as dividends. When a company pays a dividend, it is sharing a portion of its profits with its shareholders. The amount received depends on the number of shares owned.
For example, if a dividend is $0.75 per share, an owner of 85 shares would receive a payout. Publicly traded companies, especially stable ones like utility or beverage companies, often provide dividends to shareholders.
The decision to issue stock, pay dividends, or re-invest profits within a firm is made by the company's board of directors, who are elected by the stockholders. This decision-making process is particularly relevant for public companies as opposed to private firms.
Dividends are a way companies reward shareholders and can be indicative of a company's financial health and its management's confidence in future earnings. The correct option is A.