Reverse Stock Splits Reduce the Number of Shares Outstanding,and Thus

question 21

Multiple Choice

Reverse stock splits reduce the number of shares outstanding,and thus have which of the following effects on stock price?

• A)A reverse split reduces the number of shares outstanding, and thus reduces share price.
• B)A reverse split reduces the number of shares outstanding, and increases share price.
• C)A reverse split has no effect on the number shares outstanding and thus no effect on share price.
• D)A reverse split reduces the number of shares outstanding in proportion to the debt outstanding and thus increases share price.