Question

1. For what reason does a corporation usually declare a stock dividend? A stock split?

Answer 1

Solution 1 : The standard explanation behind corporation issuing a stock dividend is to give the investors something on a dividend date but then ration working capital.

A stock dividend that is charged to held income decreases the complete amassed income, and every single stock dividend lessen the per share profit. Giving a stock dividend to accomplish these finishes would be an advertising motion in that the general population would be more averse to condemn the company for high benefits or undue maintenance of income.

A stock dividend likewise might be given to acquire a more extensive conveyance of the stock. In spite of the fact that this is the principle thought in a stock split, it might be an auxiliary thought in the issuance of a stock dividend. The issuance of a progression of stock dividend will achieve a similar goal as a stock split.

Solution 2 : A stock split is planned to acquire more extensive dispersion and improved attractiveness of shares by methods for a decrease in the market estimation of the company's shares.