Stocks Beginner: Dividend Reinvestment Plans

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1.
What is a dividend reinvestment plan?
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A plan through which a shareholder can reinvest dividends in additional shares of stock. These shares are bought from the company.
2.
Through a dividend reinvestment plan, you can purchase shares of stock for a reduced brokerage fee.
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True. You can purchase them free of brokerage commissions.
3.
With a dividend reinvestment plan, the shares you purchase can be new, or they can be already-existing shares. If they are already existing, how do they get to you?
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A trustee outside the company buys them on the market. After doing this, the trustee hands them to the company, which issues them to you.
4.
In most cases, before you can participate in a dividend reinvestment plan, you must purchase your original shares _________.
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From a broker. Most, but not all, companies require this.
5.
A benefit of dividend reinvestment plans to corporations is that they are an inexpensive way to borrow money.
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False. They are an inexpensive way to raise capital without borrowing money.