If You Own 100 Shares in a Company That Announces

question 72

Multiple Choice

If you own 100 shares in a company that announces a 2-for-1 stock split (with no other announcement) ,you should

• A) be happy because your investment has doubled.
• B) be happy because you will be receiving cash from your investment as a result of the split.
• C) be sad because the value of your investment will decline because of the split.
• D) be indifferent because the overall value of your investment has not changed.

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Definitions:

Liability

Refers to the state of being legally responsible for something, such as a debt or obligation.

Agent

An individual or entity authorized to act on behalf of another, typically in a business or legal capacity, entering into agreements or making decisions.

Fiduciary Duties

Obligations one party has to act in the best interest of another party, such as a trustee towards a beneficiary.

General Partner

A type of ownership in a partnership where the general partner is responsible for the management of the partnership and is personally liable for its debts.