Conflicting answers (Corporate Issuers)

CFA Level I
#1

Which of the following is least likely to cause conflict of interests among stakeholders?

A. Debt covenants
B. stock options as part of mgmt compensation
C. Issuing Stock dividends

Ans. C

Wont issuing stock dividend create potential conflict among shareholders and debtholders?

#2

Stock dividends are shares issued for free to all shareholders. They do no alter the balance of capital in the buisness.

Payment of dividends to shareholdlers in cash could create a conflict between debt and equity holders.

1 Like
#3

Ah right, thanks!