Which Statement About a "Reverse Stock Split" Is Correct

question 53

Multiple Choice

Which statement about a "reverse stock split" is correct?

• A)The economic position of the investors is diluted after a stock split.
• B)The economic position of the investors is increased after a stock split.
• C)The economic position of the investors is decreased after a stock split.
• D)The economic position of the investors is unaffected after a stock split.

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Definitions:

Gross Profit

The financial performance metric that subtracts the cost of goods sold from total revenue, reflecting the efficiency of a company in managing its production and supply chain.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Multiple-Step Statement

A Multiple-Step Income Statement presents revenues and expenses through several sections, including operating and non-operating activities, thereby highlighting key components of income and expenditure.

Interest Expense

The cost incurred by an entity for borrowed funds; it represents the interest payable on any borrowings - bonds, loans, convertible debt, or lines of credit.