Which of the Following Commonly Stated Reasons for Stock Splits

question 27

Multiple Choice

Which of the following commonly stated reasons for stock splits has the weakest empirical evidence in support?

• A)To remain at or return to a preferred trading range
• B)A signal to the market about expected continued strong performance
• C)Increased liquidity
• D)All of the above reasons have strong empirical evidence to support them.

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Definitions:

Pure Discount Bond

A type of bond that is issued at a discount to its face value and pays no interest but instead pays the face value at maturity.

Total Assets

The sum of all assets owned by a company, including cash, investments, property, and other resources.

Equity

Equity represents ownership interest in a company, reflected by the shares issued by the corporation, entitling shareholders to company profits.