Which of the Following Statements Is CORRECT

question 52

Multiple Choice

Which of the following statements is CORRECT?

• A) When firms are deciding on the size of stock splits--say whether to declare a 2-for-1 split or a 3-for-1 split,it is best to declare the smaller one,in this case the 2-for-1 split,because then the after-split price will be higher than if the 3-for-1 split had been used.
• B) Back before the SEC was created in the 1930s,companies would declare reverse splits in order to boost their stock prices.However,this was determined to be a deceptive practice,and reverse splits are illegal today.
• C) Stock splits create more administrative problems for investors than stock dividends,especially determining the tax basis of their shares when they decide to sell them,so today stock dividends are used far more often than stock splits.
• D) When a company declares a stock split,the price of the stock typically declines--for example,by about 50% after a 2-for-1 split--and this necessarily reduces the total market value of the firm's equity.
• E) If a firm's stock price is quite high relative to most stocks--say $500 per share--then it can declare a stock split of say 20-for-1 so as to bring the price down to something close to $25.Moreover,if the price is relatively low--say $2 per share--then it can declare a "reverse split" of say 1-for-10 so as to bring the price up to somewhere around $20 per share.

Understand the impact of personality styles on stress and health.

Describe the onset and demographic distribution of conversion disorders.

Explain the potential for increased incidence of mass psychogenic illnesses due to sociocultural factors.

Differentiate between medical conditions and psychological disorders when diagnosing symptoms.

---

Definitions:

Inventories

Assets held for sale in the ordinary course of business, or materials that will be used in the production of goods to be sold.

Year 2

Typically refers to the second year of a company's operations or performance being analyzed.

Variable Costing

An accounting method in which variable costs are charged to cost units and fixed costs are treated as period costs and directly charged to the profit and loss account.

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and tax.