A Corporation's Board of Directors Could Prefer a Stock Split

question 167

Multiple Choice

A corporation's board of directors could prefer a stock split to a stock dividend because a stock split:

• A)increases the market price of the stock.
• B)reduces Retained Earnings,so the company pays less taxes.
• C)does not reduce Retained Earnings,so it does not reduce the ability to declare a cash dividend in the future.
• D)increases total stockholders' equity and allows the corporation more flexibility.

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