Strategy 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.
Dividend reinvestment plans benefit only employees of companies that have these plans.
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False. Dividend reinvestment plans benefit corporations and individuals who take advantage of them.
4.
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.
5.
Benefits of dividend reinvestment plans to investors include all of the following except _______.
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None of the above. Investors may receive discounts on brokerage fees, company products, and the option to purchase additional shares.