Cyberproblem

Fool School - Dividend Reinvestment Plans (DRIPs)

Dividend reinvestment plans (DRIPs) enable stockholders to automatically reinvest dividends received back into the stock of the paying firm. In addition, many DRIPs allow their shareholders the option to buy more shares directly from the company by just writing a check. The major advantage of this prospect is that investors are able to avoid brokerage commissions. Although some plans require small service fees, these service fees usually pale in comparison to brokerage fees; however, the specific details of DRIPs will vary from plan to plan.

To learn about dividend reinvestment plans, you need to get back to basics. Let's find out what fools thinks about them, specifically the Motley Fool. For this cyberproblem, you will be going back to school with "Motley Fool's School," found at the Web site, http://www.fool.com/school.htm. From the "Fool's School" front page, scroll down to "Drip Investing". This link will take you to the "Investing through DRIPs" section of the Fool's School.

1. According to the Fool, what are some of the advantages to DRIPs or DRPs, as the Fool refers to them?
   
   
2. What effects can DRPs have on participants investing and consumption habits?
   
   
3. Describe the three kinds of DRPs outlined by the Fool.
   
   
4. Describe Direct Purchase Plans. What are the pros and cons of this kind of program?
   
   
5. What pros and cons does the Fool mention for DRIPs/Optional Cash Purchase Plans (OCPs)?