Response to the following questions:
1. Explain how shareholders can avoid earnings per share dilution from common stock issuances?
2. An owner of 200 shares of Dunston Company common stock receives a stock dividend of four shares. (a) What is the effect of the stock dividend on the stockholder's proportionate interest (equity) in the corporation? (b) How does the total equity of 204 shares compare with the total equity of 200 shares before the stock dividend?
3. What are the conditions for declaring and paying a cash dividend?