Practice Quiz

FRM Financial Risk Manager Practice Test

Category - Dividend

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In the end of 2008, We Pro Ltd., a corporation, earned a profit. The profit was then reinvested into the corporation or was paid out to shareholders as dividends. The amount of dividends a shareholder would receive is tied to:
  1. The shareholders’ ties with the company.
  2. The number of shares that investors hold.
  3. The shareholders’ roles and seniority within the corporation.
  4. The shareholders’ trust in the corporation.
Explanation
Dividend is proportional to the number of shares that investors hold.

Key Takeaway: Dividends normally take the form of cash or shares in the company, depending on the company’s structure.
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