What Is the Most Probable Reason for Stock Splits

question 30

Multiple Choice

What is the most probable reason for stock splits?

• A) The economic benefit for the firm
• B) The increase in the number of shares where the price stays the same
• C) Trading price at an acceptable level for small investors
• D) Trading price at the penny stock level

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Definitions:

Product Prices

The financial cost at which goods or services are offered to consumers in the market.

Budget Line

A graphical depiction of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

Money Income

The total amount of monetary earnings received by an individual or household, including wages, salaries, and investment returns.

Fixed

Relates to assets or costs that do not change with the level of production or business activity in the short term.