Example 1easy
- A)No, dividend is calculated on the Nominal (Face) Value of the share.
- B)Yes, because market value reflects the current worth.
- C)Yes, but only if the shares are bought at par.
- D)No, dividend is calculated on the total investment made.
Step-by-step solution
- Dividends represent a share of the company's profits distributed to shareholders.
- The dividend rate is consistently declared and calculated on the Nominal (or Face) Value of each share, not on its Market Value, which can fluctuate daily.
Answer: No, dividend is calculated on the Nominal (Face) Value of the share.