ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -With dividend reinvestment, you buy more shares in the company or fund that paid the dividend, typically when the dividend is paid. Over time, dividend reinvestment can help you compound your gains by buying more stock and reducing your risk through dollar-cost averaging.
Detailed explanation-2: -Dividends are issued as cash, but many companies offer their shareholders the option to have their dividends automatically reinvested in additional shares.
Detailed explanation-3: -A dividend reinvestment plan (DRIP or DRP) is a plan offered by a company to shareholders that it allows them to automatically reinvest their cash dividends in additional shares of the company on the dividend payment date.
Detailed explanation-4: -Some companies offer dividend reinvestment plans (DRP). These enable investors to automatically reinvest dividend payments into new shares in the company. DRPs generally allow investors to reinvest either a portion or all of a dividend payment into new shares.