Which Statement About a "Stock Split" Is Correct

question 74

Multiple Choice

Which statement about a "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:

Accounting Profit

The difference between the total revenue and explicit costs of a firm, not accounting for implicit costs.

Economic Profit

The variance between a company's overall incomes and its combined explicit and implicit expenses.

Implicit Costs

The opportunity costs of using resources owned by the firm for its operations instead of renting, selling, or utilizing them in other ways.

Implicit Costs

The opportunity costs of using resources that a firm already owns, typically non-out-of-pocket costs.