Question

Younger Company has outstanding both common stock and nonparticipating, non-cumulative preferred stock. The liquidation value of the preferred is equal to its par value. The book value per share of the common stock is unaffected by

a. the payment of a previously declared cash dividend on the common stock.
b. the declaration of a stock dividend on common stock, payable in common stock when the market price of the common stock is equal to its par value.
c. a 2-for-1 split of the common stock.
d. the declaration of a stock dividend on preferred stock, payable in preferred stock when the market price of the preferred stock is equal to its par value.

Answer 1

Option B

Step-by-step explanation:

In simple words, A stock dividend refers to the payout to owners that is rendered not in cash but in securities. Such kind of dividend payment has the benefit of satisfying stakeholders without decreasing the cash flow for the business. Usually, these dividends are decided to make as fragments paid out per existing securities in hand.

Whenever dividend is paid in stock is paid, the overall asset interest stays the very same on both the viewpoint of the lender and the viewpoint of the business. Both dividend payments therefore include a newspaper submission for the distribution issuing firm.