A Reverse Stock Split Is Defined as A(n)

question 22

Multiple Choice

A reverse stock split is defined as a(n) :

• A) increase in the number of shares outstanding.
• B) company buying back existing shares of its stock on the open market.
• C) company issuing additional shares to its existing shareholders.
• D) decrease in the number of shares outstanding without affecting total owners' equity.
• E) decrease in both the number of shares outstanding and the market price per share.

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Definitions:

Price

The amount of money expected, required, or given in payment for something. It serves as a signal between buyers and sellers in a market.

Labor

The human effort, both physical and mental, used in the production of goods and services.

Substitution Effect

The change in quantity demanded of a good or service as consumers switch to or from substitutes when the price changes.

Income Effect

The change in an individual's or economy's income and how that change will impact the quantity demanded of a good or service.