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What is the process for receiving a loan stock dividend?

To receive a loan stock dividend, you must own shares of the company that issues the dividend. The company will announce the dividend payment date, and you will receive the dividend in the form of additional shares of stock or cash, depending on the company's policy.


What is the difference between a stock dividend and a cash dividend?

A stock dividend is when a company distributes additional shares of its stock to shareholders, while a cash dividend is when a company pays out cash to shareholders as a form of profit sharing.


Explain the importance of profit maximisation for a public limited company?

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How would the price of a stock be affected by its dividend?

Paying a dividend costs the company and as such will decrease the value of the company and the stock. If all other factors are equal, a buyer would prefer a stock that is expected to pay the higher dividend. If Company A is expected to pay $10 per share annually and Company B $8, an investor who wants to make 8% would be willing to bid $125 for a share of Company A but only $100 for Company B. On the date that a dividend is effective, a company's stock will drop by the amount of the dividend because that amount will be paid to the person who owned the stock at the beginning of that day.


Why does the stock price drop after a dividend is paid out?

The stock price drops after a dividend is paid out because the company's value decreases by the amount of the dividend paid to shareholders. This reduction in the company's value is reflected in the stock price, leading to a drop.

Related Questions

Importance of profit maximization for a public limited company?

Profit maximisation let the run business perfectly and better uses of resources or to pay dividend to the shareholders however also to expand their business to attract more new shareholders or give shareholder to reinvest in their company.


What is the process for receiving a loan stock dividend?

To receive a loan stock dividend, you must own shares of the company that issues the dividend. The company will announce the dividend payment date, and you will receive the dividend in the form of additional shares of stock or cash, depending on the company's policy.


What is the difference between shareholder wealth maximisation and stakeholder wealth maximisation?

Shareholder and stakeholder in a company are the investors and company assets holder respectively. So the wealth maximization in both cases is nothing but increase in the share value for shareholder and company profitability for stakeholder.


What is the meaning of proposed dividend?

Proposed Dividend means a dividend that is paid by the company that the end of a finical year.


What is the importance of dividend history in finances?

Dividend history is important especially for stock investing. Without knowing the dividend history for a company, you will never know if the company will be reliable to pay the dividend every quarter.


What is the difference between a stock dividend and a cash dividend?

A stock dividend is when a company distributes additional shares of its stock to shareholders, while a cash dividend is when a company pays out cash to shareholders as a form of profit sharing.


What is dividend receivable?

Dividend is recieved by company shareholder as a profit and according to their shares.


What is a simple explanation of a dividend?

A dividend is a share of a company's profit paid to each stockholder.


Explain the importance of profit maximisation for a public limited company?

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What is the difference between dividend proposed and dividend paid?

A company proposes a dividend to be paid to shareholders. The shareholders vote on this and the dividend that is actually paid may differ from that proposed.


What time can you sell shares to qualify for the dividend?

You can sell shares to qualify for the dividend on or after the ex-date (ex-dividend date), which will be announced the company


What does declare a dividend mean?

Declaring a dividend is a corporate action taken by the board of directors of a company. Usually this is done once or twice a year when the company's financial results are declared and the company has made handsome profits/revenues. Dividend is usually declared as a % of the face value of a share. A 100% dividend on a Rs. 1/- face value share represents a dividend of Rs. 1/- similarly a 100% dividend on a Rs. 10/- face value share represents a dividend of Rs. 10/- Ex: You hold 1000 shares of XYZ limited with a face value of Rs. 5/- the company has declared a 50% dividend. Then you would receive Rs. 2,500/- as dividend.