Which of the Following Is Not a Side Effect of a Stock

question 28

Multiple Choice

Which of the following is not a side effect of a stock split?

• A) There is no effect on retained earnings account
• B) Investors face no tax implications
• C) The average share price will be reduced to reflect the split
• D) There will be no change in the number of shares outstanding

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Definitions:

Inefficently

Operating in a manner that does not maximize productivity or use resources in the best possible manner.

Taxes

Imperative monetary contributions or distinct types of taxation demanded from a taxpayer by a public authority to cover the costs of governmental functions and diverse public financial needs.

Incentives

Motivators or stimuli that encourage or promote certain behaviors or actions by offering rewards or benefits.

Market Size

The total number of potential buyers and sellers of a particular product or service within a given market.