On July 28, 2016, American Capital Agency declared a cash dividend of $0.27 a sh

Question

On July 28, 2016, American Capital Agency declared a cash dividend of $0.27 a share, to be paid on September 11, 2016, to shareholders of record as of September 2, 2016. The ex-dividend date is lune 30, 2008. In order to receive this dividend, an investor would have to purchase the stock on or before 10 A September 11, 2016 B August, 29, 2016 C September 2, 2016 D July 28, 2016 Which of the following statements regarding dividend reinvestment plans (DRIPs) is true? A 8 11 DRIPS typically allow shareholders to avoid paying brokerage fees Many DRIPs allow shareholders to purchase shares of the stock at lower-than-market prices Shareholders can avoid taxes that they would have had to pay if they reinvest the dividends through a tax qualified DRIP rather than receiving the cash payment D all of them A stock dividend A increases the earnings per share of the firm B increases the aggregate market value of the firm's stock increases the total wealth of the shareholder reduces the market price per share of the firm's stock mas 20 million shares outstanding, and the market value oe nlit what will the total market value of te

Explanation / Answer

10.Investor must purchase the stock atleast 3 days before the record date (September 2 2016 ) that is August 29 2016.

11.A.DRIPS typically allow shareholders to avoid paying brokerage fees.

12.B.Increases the aggregate market value of the firm's stock.

Since number of stock increases , multiplied by stock price it increases market value.

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