Which of the Following Is a Reason for a Company

question 186

Multiple Choice

Which of the following is a reason for a company to announce a stock split?

• A) to reward investors
• B) to increase total stockholders' equity
• C) to decrease the market price at which the stock is trading
• D) to provide the shareholders with something of value, when the company cannot afford a cash dividend

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Definitions:

Premium

The amount paid for an option or insurance policy above its intrinsic value or the amount that an asset's selling price is above its face value.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Option Contract

A financial contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

At The Money

Describes an option where the current price of the underlying asset is equal to the strike price of the option.