Which One of the Following Is a Valid Reason for a Stock

question 8

Multiple Choice

Which one of the following is a valid reason for a stock split?

• A)To increase ownership percentages of individual shareholders
• B)To adjust the market price of the shares to a level where more individuals can afford to invest in the stock
• C)To increase reported net income during subsequent accounting periods
• D)To increase the book value per share of common stock

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Definitions:

Future Interest Rates

An indication of what the cost of borrowing money or the rate of return on investments will be at a future date.

Callable Bonds

Bonds that give the issuer the right to redeem them before their maturity date at a pre-specified price.

Bond Indenture

The underlying contract between the company issuing bonds and the bondholders.

Bond Premium

The additional amount over the face value for which a bond is sold, representing the difference between the bond's issue price and its nominal value.