What term refers to a sum of money regularly paid by a company to its shareholders from its profits?

What term refers to a sum of money regularly paid by a company to its shareholders from its profits?

• A. Equity
• B. Dividend
• C. Interest
• D. Capital gains

Answer: (B)

The correct term for a sum of money regularly paid by a company to its shareholders from its profits is "dividend." Dividends are a portion of a company's earnings that are distributed to shareholders as a reward for their investment and ownership stake in the company. These payments can be made in cash or as additional shares of stock and are typically issued on a quarterly basis, although the frequency can vary. Dividends are an important aspect of investing in stocks, as they provide income to shareholders even when the stock price does not appreciate. Companies that consistently pay dividends are often viewed as financially stable and profitable, making them attractive to investors seeking both growth and income. The other terms mentioned do not describe this process. Equity represents ownership in a company, interest refers to the cost of borrowing money or the return on investment for lending, and capital gains refer to the profit made from selling an asset for more than its purchase price. Thus, the distinction between these concepts underlines why "dividend" is the precise answer.

The correct term for a sum of money regularly paid by a company to its shareholders from its profits is "dividend." Dividends are a portion of a company's earnings that are distributed to shareholders as a reward for their investment and ownership stake in the company. These payments can be made in cash or as additional shares of stock and are typically issued on a quarterly basis, although the frequency can vary.

Dividends are an important aspect of investing in stocks, as they provide income to shareholders even when the stock price does not appreciate. Companies that consistently pay dividends are often viewed as financially stable and profitable, making them attractive to investors seeking both growth and income.

The other terms mentioned do not describe this process. Equity represents ownership in a company, interest refers to the cost of borrowing money or the return on investment for lending, and capital gains refer to the profit made from selling an asset for more than its purchase price. Thus, the distinction between these concepts underlines why "dividend" is the precise answer.