Which of the Following Is a Possible Motivation for a Reverse

question 207

Multiple Choice

Which of the following is a possible motivation for a reverse stock split?

• A) Decrease the stock price and, thereby, increase the stock's marketability.
• B) Avoid falling below the minimum listing requirements of a stock exchange.
• C) Force out minority shareholders.
• D) Decrease the book value of the stock.
• E) Increase the transaction costs of shareholders.

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Definitions:

Tax System Equity

The fairness of a tax system, assessed by how the tax burden is distributed among different groups in society.

Deadweight Losses

Economic inefficiencies that occur when the allocation of resources is not optimal, typically due to market imbalances or government interventions.

Tax

A compulsory financial charge or other type of levy imposed on a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable, leading to misallocation of resources.