Which of the Following Is Correct Regarding a Two-For-One Stock

question 48

Multiple Choice

Which of the following is correct regarding a two-for-one stock split?

• A) The purpose of the split may be to decrease the value per share of the stock.
• B) The purpose of the split is to make a distribution to the stockholders.
• C) After the split, each stockholder will have greater ownership interest in the corporation.
• D) The value of each share of stock will increase as a result of the split.

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Definitions:

Price Floor

A government-imposed limit below which prices cannot fall, often used in agricultural markets.

Equilibrium Price

The price at which the quantity of goods demanded equals the quantity of goods supplied, leading to market stability.

Ineffective

Not producing the intended or desired effect.

Economic Cost

The total cost of choosing one action over another, including both direct costs and any lost opportunity costs.