Which term describes the distribution of a company's earnings to shareholders?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the NOCTI Financial and Investment Planning Test. Study with flashcards and multiple choice questions, each with detailed hints and explanations. Set yourself up for success!

Multiple Choice

Which term describes the distribution of a company's earnings to shareholders?

Explanation:
Distributing earnings to shareholders happens through dividends. Dividends are payments—cash or additional shares—made from a company’s profits to its owners. They are the actual distribution of earnings. Yield, by contrast, is a rate of return calculated from dividend income relative to the stock price, not the act of paying out profits. A prospectus is the document that describes a security offering, and a capital asset is a long-term asset used in business. For example, if a company earns more than it keeps, it may pay a cash dividend of $1 per share to shareholders, which is the distribution of profits.

Distributing earnings to shareholders happens through dividends. Dividends are payments—cash or additional shares—made from a company’s profits to its owners. They are the actual distribution of earnings. Yield, by contrast, is a rate of return calculated from dividend income relative to the stock price, not the act of paying out profits. A prospectus is the document that describes a security offering, and a capital asset is a long-term asset used in business. For example, if a company earns more than it keeps, it may pay a cash dividend of $1 per share to shareholders, which is the distribution of profits.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy