Explain the benefits of a stock dividend

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Reference no: EM13133384

1.Assume that you have decided to invest a portion of your money in the stock market. You ask your broker to submit a couple of preferred stocks for you to consider as an investment. Your broker recommend the following two companies, both are startup companies and you agree with your broker that both have excellent potential for the future.

Company A: Nonculmative, preferred stock with a $4 per-year dividend rate. Each share of this stock will cost you $20.

Company B: Culmative, preferred stock with a $4 per-year dividend rate. Each share of this stock will cost you $25.
You have decided to invest in only one of these companies.State which compnay ypu would choose and why.

2. Explain the benefits of a stock dividend both to the coprporation issuing the dividend and to the shareholder receiving the dividend.

Reference no: EM13133384

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