Extra Dividend

### What is the primary purpose of issuing an extra dividend? - [ ] To increase the stock price permanently - [x] To reward shareholders and share the benefits of exceptional profitability - [ ] To reduce company expenses - [ ] To reinvest in the company's operations > **Explanation:** The primary purpose of issuing an extra dividend is to reward shareholders for their investment and share the benefits of exceptional profitability. ### How often are extra dividends typically paid out? - [ ] Monthly - [ ] Annually - [ ] Quarterly - [x] They are unscheduled and paid out under special circumstances > **Explanation:** Extra dividends are unscheduled payments made under special circumstances, typically following exceptional financial performance. ### What type of shareholder loyalty might a company cultivate by issuing extra dividends? - [x] Positive shareholder loyalty - [ ] Negative shareholder loyalty - [ ] Neutral shareholder loyalty - [ ] Disinterested shareholder loyalty > **Explanation:** Extra dividends help to cultivate positive shareholder loyalty by rewarding shareholders and encouraging them to remain invested in the company. ### What financial performance typically triggers an extra dividend? - [ ] Poor financial performance - [ ] Average financial performance - [x] Exceptional financial performance - [ ] Declining financial performance > **Explanation:** Exceptional financial performance, such as a particularly profitable year, typically triggers the distribution of an extra dividend. ### Extra dividends are often accompanied by what other type of dividend? - [ ] Liquidating dividend - [ ] Preferred dividend - [ ] Deferred dividend - [x] Regular dividend > **Explanation:** Extra dividends are additional payments that accompany the regular dividend, which is the scheduled periodic payment to shareholders. ### Which entity or group generally approves the distribution of an extra dividend? - [ ] Shareholders - [ ] The SEC - [x] The company's board of directors - [ ] Government regulatory bodies > **Explanation:** The company’s board of directors typically approves the distribution of an extra dividend, reflecting confidence in the company's financial health and prospects. ### When a company pays an extra dividend, what does it imply about its excess profits? - [x] The company has excess profits it wants to disburse to shareholders - [ ] The company wants to reinvest those profits - [ ] The company plans to use the excess profits to pay off debt - [ ] The company does not have excess profits > **Explanation:** When a company pays an extra dividend, it implies that it has excess profits it wishes to disburse to shareholders beyond the regular dividend. ### How is an extra dividend generally perceived by the stock market? - [ ] As a sign of financial trouble - [x] As a sign of strong financial health and confidence - [ ] As an irrelevant event - [ ] As a routine part of business operations > **Explanation:** An extra dividend is generally perceived by the stock market as a sign of strong financial health and confidence in continued profitability. ### In which sector are extra dividends more commonly observed? - [ ] Non-profit organizations - [ ] Start-ups - [x] Established, profitable companies - [ ] New businesses > **Explanation:** Extra dividends are more commonly observed in established, profitable companies that have a track record of strong financial performance. ### What is a key distinction between a special dividend and an extra dividend? - [ ] Amount paid - [x] Frequency and conditions of payment - [ ] Method of payment - [ ] Shareholder eligibility > **Explanation:** The key distinction is that a special dividend is often a one-time payment due to extraordinary events, while an extra dividend is an additional unscheduled dividend payment made under special profitable conditions.