Stock Splits Have No Tax Implications Because

question 75

Multiple Choice

Stock splits have no tax implications because:

• A)shareholders have not increased their proportionate ownership of the firm.
• B)the shareholder's wealth has not increased as a result of the stock split.
• C)the shares originally owned by stockholders have been reduced in value in proportion to the number of additional shares received through the stock split.
• D)All of the above

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Definitions:

Inflation Rate

The tempo at which the universal price levels of goods and services advance, impairing the ability to buy.

Finnish Security

A financial investment like stocks, bonds, or other assets originating from Finland or issued by Finnish entities.

Real Rate

The real rate is the rate of interest an investor expects to receive after allowing for inflation, essentially reflecting the real cost of funds to the borrower and the real yield to the lender.

Spot Exchange Rate

The current exchange rate at which a currency can be bought or sold for immediate delivery.