4
QuizMultiple Choice

Investing

Question 4 • Personal Finance - EL3403

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Answer
Y
Yes, the payment of dividends indicates that a stock’s value has increased.
N
No, the payment of dividends indicates that a company has earned profits.
Y
Yes, the payment of dividends indicates that a company’s assets have grown.
N
No, the payment of dividends indicates that a company can repay investors.

Explanation

A dividend is a payment a company distributes to shareholders, often from profits. It does not show that the stock’s market price has increased; share-price appreciation is a separate change in value. So the best choice is “No, the payment of dividends indicates that a company has earned profits.”

AI-written and checked against the verified answer.

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