Question

Harold owns $2,000 worth of stock in one corporation. He was just issued a payment of $40, representing a fraction of the stock's value. What does this payment MOST LIKELY represent?

Answer 1

Dividend

Step-by-step explanation:

Shareholders have ownership of the stock of a company. They purchase the shares and the cash paid is like an investment in the company.

For investing their funds, shareholders receive payments from the profit of the business. This is called dividend payment.

The company's profit is shared among shareholders.

Dividends are usually paid annually.

In the scenario above Harold has stock valued at $2,000 but recieved a dividend payment of $40 from the profits of the corporation.