Which of the following would most likely stimulate interest in stock without adjusting retained earnings?

Question

a) a 20% stock dividend
b) a 100% stock dividend
c) a 2-for-1 stock split

Answer 1

It's been a while since I did this stuff in school, but I believe the answer is C. Although B and C are somewhat similar, the investor would have to pay taxes on A and B and thus would probably not like getting a stock dividend if they were a buy and hold investor!

;-)

Answer 2

Any positively viewed corporate change would stimulate interest in a particular stock. (c) will not adjust the retained earnings, however, the effect of b and c are similar on the corporate structure.
Hope this helps
Boudames