Upward stock splits are different from stock dividends but both of them result i

Question

Upward stock splits are different from stock dividends but both of them result in an increase in the number of outstanding shares. A corporation has 10,000 shares of outstanding stock. Which of the following pairs of numbers will yield the same number of new shares outstanding?
A) A 5 for 4 stock split is the same as a 33% stock dividend.
B) A 5 for 4 stock split is the same as a 20% stock dividend.
C) A 5 for 4 stock split is the same as a 30% stock dividend.
D) A 5 for 4 stock split is the same as a 25% stock dividend.
E) A 5 for 4 stock split is the same as a 15% stock dividend.

can you explain how you got the answer?

Explanation / Answer

D) A 5 for 4 stock split means for every 4 shares you own you now have 5, or one more than you previously had. A 25% stock dividend means you get additional shares equal to 25% of the stock you now have. So if you had 4 shares you would get one more, since 25% of 4 is 1. So the two are the same.

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