A stock dividend a decreases the par value of the stock and

Solution

Answer: D. None of the above A stock dividend is like a cash dividend but is paid in the form ofadditional stock shares. This does NOT necessarily mean that newissues are involved, as both previous posters incorrectly assumed.Additionally, the par value of the stock is completely irrelevant,as it is only the market price of the stock that is affected. A stock dividend would not reduce the number of shares to eachstockholder, as each stockholder receives additional shares. Norwould a stock dividend increase retained earnings, as theseearnings are expended in paying for the dividend.