SIE Exam Question 117: Answer and Explanation

Question: 117

An investor who owns 200 shares of XYZ Company, which is currently trading at $25.00, will be receiving a 20 percent stock dividend. What will the investor receive on the payment date?

• A. $1,000
• B. $100
• C. 20 shares of XYZ stock
• D. 40 shares of XYZ stock

Correct Answer: D

Explanation:

The investor will receive 40 shares of XYZ stock on the payment date. A stock dividend is a distribution made by a company to its shareholders of additional shares of stock. Since the company is issuing each shareholder an extra share (20%) for every share owned, an individual who holds 200 shares will receive new shares of XYZ Company.