If the Stock of a Listed Firm Decreases by 50

question 19

Multiple Choice

If the stock of a listed firm decreases by 50 percent, what does it mean to the shareholders?

• A)Their ownership of the firm will decrease by 50 percent.
• B)Total value of their holdings decreases by 50 percent.
• C)The debt of the firm decreases by 50 percent.
• D)nothing

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Definitions:

Income Tax Allocation

Refers to the process of assigning income tax expense or benefit to various components of an organization's financial statements.

Balance Sheet

A financial statement that shows a company's financial position at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Cost Method

An accounting approach used for investments, where the investment is recorded at its original purchase cost without considering changes in its market value.

Equity Method

An accounting technique used to record investments in other companies, where the investment is reported as an asset and the investor's share of the investee's income is reported in the income statement.