Similar to a stock split, a stock dividend also distributes additional shares of stock to existing stockholders on a pro-rata basis at no cost to the stockholders.
In order to expand the number of shares outstanding, a company's board of directors may decide to split its stock by issuing more shares to current shareholders.
A stock split is a ratio-based division of issued shares, whereas a stock dividend is a dividend given in the form of additional shares. A stock dividend offers stockholders additional shares, as opposed to a stock split, which divides already-issued shares into a new number of shares according to a predetermined ratio.
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