Question

The kennesaw manufacturing corp. board of directors passed a resolution approving payment to shareholders in the form of the corporation shares. this decision will decrease the value per share and increase the number of shares outstanding. this is most likely a:

1) cash dividend
2) stock split
3) stock repurchase
4) stock dividend

Answer 1

The action described is most likely a stock dividend, which distributes additional shares to shareholders and dilutes the share value but increases the number of shares they own.

Step-by-step explanation:

When the Kennesaw Manufacturing Corp. board of directors passed a resolution approving payment to shareholders in the form of the corporation's shares, which results in a decrease in value per share and an increase in the number of shares outstanding, this action is most likely a stock dividend.

A stock dividend is when a company pays a dividend in the form of additional shares rather than in cash, increasing the number of shares owned by each shareholder. This is different from a cash dividend, where shareholders receive a direct payment in cash, a stock split, which also increases the number of shares but is typically done to reduce the market price of individual shares, or a stock repurchase, where the company buys back its own shares, reducing the number of outstanding shares and usually increasing the share value.