Which Statement About a "Reverse Stock Split" Is Correct

question 53

Multiple Choice

Which statement about a "reverse stock split" is correct?

• A)The economic position of the investors is diluted after a stock split.
• B)The economic position of the investors is increased after a stock split.
• C)The economic position of the investors is decreased after a stock split.
• D)The economic position of the investors is unaffected after a stock split.

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Definitions:

Variable Cost Per Unit

The cost that varies with each unit produced or sold, not including fixed costs.

Fixed Cost Per Unit

The total fixed costs of production divided by the quantity of output produced, indicating how fixed costs dilute as production volume increases.

Mixed Cost

A cost composed of a fixed and variable component, changing with the level of output or activity.

Variable Cost

A cost that varies in direct proportion to changes in the level of activity or production volume.