All Else Equal, a Regular Stock Split

question 11

Multiple Choice

All else equal, a regular stock split:

• A)results in a significant increase in the per share price of the stock.
• B)reduces the profits earned by a firm.
• C)increases the number of shares of stock outstanding.
• D)should not be recognized on the firm's financial statements.
• E)increases the dividend per share paid by a firm.

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Definitions:

Perfectly Elastic

Describes a situation in economic theory where the quantity demanded or supplied changes infinitely in response to any change in price.

Tax

An enforced economic levy or different levy applied to a taxpayer by a governmental agency intended to provide for government spending and multiple public outlays.

Perfectly Inelastic Supply

Perfectly Inelastic Supply describes a situation in which the quantity supplied of a good does not change regardless of price movements.

Tax Increase

The act of raising the rates of taxes imposed by the government, which can affect consumer spending, investment, and overall economic growth.