Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
What are dividend reinvestment plans?
Expert Solution
Step 1
Introduction:
Usually, dividend is nothing but, sharing a portion of profits of the corporation, as determined by the board of directors of the corporation to the class of its owners. It is most commonly estimated in terms of dollar amount earned by each share (dividend per share).
Step 2
Answer:
The Dividend reinvestment plan (DRIP) is a scheme where shareholders will automatically put into their cash dividends into extra shares of the common stock of the company. The fundamental principle of investing is that if the enterprise is good enough to invest in, it is profitable enough to grow in.
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