Which of the Following Statements Accurately Explains Why the Board

question 124

Multiple Choice

Which of the following statements accurately explains why the board of directors of a company that is facing financial difficulties might issue a 2-for-1 stock split rather than declare a 100% stock dividend?

• A) A stock split would not reduce the market price per share, whereas a stock dividend would.
• B) A stock split would reduce the market price per share, whereas a stock dividend would not.
• C) A stock split would increase total stockholders' equity, whereas a stock dividend would not.
• D) A stock split would not reduce retained earnings, whereas a stock dividend would.

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Definitions:

Expectations

Socially constructed assumptions about how individuals should behave or what outcomes should occur in specific contexts.

Class Status

The ranking of an individual or group in a hierarchical social structure, often based on wealth, profession, education, or lineage.

Max Weber

A German sociologist, philosopher, and political economist whose ideas profoundly influenced social theory and social research.

Pierre Bourdieu

A French sociologist who developed key concepts such as cultural capital, habitus, and field to explain social stratification and power dynamics.