Firm x has declared a stock dividend that pays one share of stock for every five shares owned. after the stock dividend, earnings per share will: . remain the same. b. decline 20%.c. decline 5%.d. not enough information.

Option (b) Decline 20%

Explanation:

Data provided in the question:

Firm X has declared a stock dividend that pays one share of stock for every five shares owned

Therefore,

The increase in number of shares

= [ 1 ÷ 5 ] × 100%

= 20%

Thus,

The earnings per share will decrease by the amount of increase in number of shares i.e decrease by 20%

Hence,

Option (b) Decline 20%

this business is a price setter.

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