Which of the Following Statements Is Correct About Investors in Ajax

question 110

Multiple Choice

Which of the following statements is correct about investors in Ajax Industries,which has just announced a three-for-one stock split?

• A) Investors will triple their wealth after the split.
• B) Investors' wealth will fall by two-thirds after the split.
• C) Percentage of ownership increases for the investors.
• D) Earnings per share will fall by two-thirds after the split.

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Definitions:

Fixed Costs

Expenses that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Long Run

The Long Run is a period in economics during which all factors of production and costs are variable, allowing for adjustment to changing market conditions.

Fixed Amount

A specific, unchanging quantity of something.

Diminishing Returns

An economic principle that states as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase proportionally.