Dividends and Stock Investments Quiz
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Questions and Answers

What is the primary purpose of dividends for stockholders?

  • To decrease the company's equity
  • To increase the company's debt
  • To provide a return on their investment (correct)
  • To guarantee future stock price increase
  • What distinguishes creditors from stockholders?

  • Creditors become owners of the business
  • Creditors have the legal right to receive back the principal and interest payments (correct)
  • Stockholders have the legal right to receive back the principal and interest payments
  • Stockholders do not have the legal right to receive back the principal and interest payments
  • What is the main way a company can raise funds through 'debt'?

  • Selling company assets
  • Borrowing money from investors or banks (correct)
  • Acquiring other companies
  • Issuing new shares of stock
  • What is the significance of a company paying dividends every year?

    <p>It indicates a consistent return to stockholders</p> Signup and view all the answers

    How do equity investors differ from debt investors?

    <p>Equity investors become owners of the business, but debt investors do not</p> Signup and view all the answers

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