Stock Splits Can Be Used To

question 82

Multiple Choice

Stock splits can be used to:

• A)adjust the market price of a stock such that it falls within a preferred trading range.
• B)decrease the excess cash held by a firm thereby lowering agency costs.
• C)increase both the number of shares outstanding and the market price per share.
• D)increase the total equity of a firm.
• E)adjust the debt-equity ratio.

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Definitions:

Hay

Dried grass, often used as fodder for livestock.

Price

The monetary worth anticipated, necessitated, or provided in compensation for an item.

Equivalent Variation

A measure in economics that captures the change in income needed to reach a utility level after a price change, keeping welfare constant.

Utility Function

A mathematical model used in economics to represent a consumer's preference ranking for different bundles of goods, showing satisfaction levels.