Canadian Securities Course (CSC) Level 1 Practice Exam

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What is the difference between a regular dividend and an extra dividend?

Regular dividend is unpredictable while an extra dividend is fixed
Regular dividend is an additional bonus while an extra dividend is a primary payment
Regular dividend is a specified amount paid annually while an extra dividend is a bonus payment
Regular dividend does not need to be maintained annually while an extra dividend does

The correct answer is: Regular dividend is a specified amount paid annually while an extra dividend is a bonus payment

Regular dividends are typically a specified amount paid by a company to its shareholders on a regular basis, often quarterly or annually. These dividends are established and declared by the company's board of directors. On the other hand, extra dividends are additional payments made by the company on top of the regular dividends. They are not part of the regular dividend policy and are typically paid when the company experiences unexpected profits or has excess cash to distribute to shareholders. Therefore, option C is the correct choice as it accurately distinguishes between regular dividends and extra dividends.