Final answer:
The correct answer to the question of what form a dividend can take besides cash is 'a. shares of common stock'. Dividends are one way investors can receive a rate of return, with capital gains being another.
Step-by-step explanation:
A dividend can be described as a direct payment from a firm to its shareholders. In the scenario of a multiple-choice question, the possible forms a dividend can take, besides cash, could include shares of common stock, options, warrants, and promissory notes. The correct answer to the question 'a dividend can be in the form of cash or ___' would be 'a. shares of common stock', as it is a common practice for companies to issue additional stock to their shareholders as a form of dividend payment. This is sometimes preferred by investors who wish to reinvest in the company.
When firms issue stock, investors are looking for a rate of return. This can be provided through dividends or through capital gains, which is the increase in value of the stock between the time it is bought and when it is sold. Understanding these concepts is crucial for anyone involved in equity investment as they comprise the fundamental ways in which an investment can grow over time.