Which of the Following Occurs When the Board of Directors

question 98

Multiple Choice

Which of the following occurs when the board of directors declares a 3-for-1 stock split on 10,000 outstanding shares of $15 par common stock?

• A)The par value of the stock remains the same.
• B)The par value of the stock increases to $30 per share.
• C)The number of outstanding shares remains at 10,000.
• D)The number of outstanding shares increases to 30,000.

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Definitions:

Compounded Semi-Annually

The method of calculating interest where the accrued interest is added to the principal sum every six months.

Lump Payment

A single, large payment made at once, as opposed to smaller, periodic payments.

Compounded Semi-Annually

This is the process where interest is added to the principal sum of a loan or deposit twice a year, resulting in interest being earned on interest from that point on.

Replacement Stream

A series of cash flows intended to replace the benefits of an asset or investment over time.