Which of the Following Statements Is True

question 181

Multiple Choice

Which of the following statements is true?

• A)Both a stock dividend and a stock split increase the balance in the common stock account.
• B)Both a stock dividend and a stock split reduce retained earnings.
• C)Neither a stock dividend nor a stock split will result in net gains or losses.
• D)A stock split increases the par value per share of the stock.

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Definitions:

Cumulative Return

Cumulative return is the aggregate amount of money gained or lost by an investment over a set period, typically expressed as a percentage.

Initial Margin

The portion of the purchase price that an investor must deposit when buying securities on margin; serves as a down payment on the investment.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, to keep the account open.

Long Futures Position

Holding a futures contract that obligates the buyer to purchase the underlying asset at a specified price on a specified future date, typically anticipating a price rise.