Which of the Following Statements Is not True About a 2-For-1

question 115

Multiple Choice

Which of the following statements is not true about a 2-for-1 stock split?

• A)The market value of the stock will probably decrease.
• B)A stockholder with 5 shares before the split owns 10 shares after the split.
• C)Par value per share is reduced to half of what it was before the split.
• D)Total paid-in capital increases.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and typically dividends that are paid out before those to common stockholders.

Annual Dividend

The total amount of dividend payments a company makes to its shareholders over a single fiscal year.

Return

The income generated on an investment over a particular period of time, expressed as a percentage of the investment's initial cost.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset at a specified price within a specific time period.