Ace the Canadian Securities Course 2025 - Rock the CSC Practice Exam!

A dividend reinvestment plan (DRIP) is intended to automatically reinvest stock dividends back into the same company's stock. This is beneficial because it allows shareholders to increase their ownership in the company without having to spend additional money on purchasing more shares. Options A and B are incorrect because they do not reflect the purpose of a DRIP. Selling dividends for profit or preventing dividends from being paid out goes against the concept of reinvesting dividends. Option D is incorrect because a DRIP does not distribute dividends among shareholders, but rather reinvests them into the company.