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Definition of 'Distribution'

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In finance, distribution refers to the process of allocating income or assets to the parties involved in a transaction. This can include dividends paid to shareholders, interest paid to bondholders, or rent paid to landlords. Distributions can also be made in the form of cash, stock, or other assets.

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The distribution of income or assets is often governed by a contract or agreement between the parties involved. For example, a company's articles of incorporation may specify how dividends will be paid to shareholders. Similarly, a bond indenture may specify how interest will be paid to bondholders.

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In some cases, the distribution of income or assets may be governed by law. For example, the law may require that a company distribute its profits to shareholders in the form of dividends. Similarly, the law may require that a landlord distribute rent to a tenant in the form of cash.

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The distribution of income or assets can have a significant impact on the parties involved. For example, dividends can provide shareholders with a return on their investment, while interest payments can help bondholders to repay their debt. Similarly, rent payments can help landlords to cover their costs and generate a profit.

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As a result, the distribution of income or assets is an important consideration for businesses, investors, and other parties involved in financial transactions. By understanding the different types of distributions and how they are governed, these parties can make informed decisions about their financial affairs.

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