Which of the Following Is the Most Probable Way in Which

question 31

Multiple Choice

Which of the following is the most probable way in which a shareholder will benefit from a stock split?

• A) The immediately lower share price will attract enough increased interest in the stock to cause the market price to increase on a more consistent basis.
• B) The immediately higher number of shares that an investor owns immediately increases the investor's wealth.
• C) The shareholder can use the immediately increased wealth to borrow more money to buy even more shares at the immediately lower market price.
• D) A shareholder can lose money after a stock split if the market believes that the split was an artificial way of attracting attention to a company that is not well managed.

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Definitions:

Monopoly

An economic scenario in which only one company dominates the entire market's supply of a specific product or service, with no competitors.

Profit-Maximizing

How a corporation figures out the most profitable price and volume of production.

Output

The total amount of goods or services produced by a firm or economy.

Total Revenue

The total amount of money a company receives from its business activities before any expenses are subtracted, calculated by multiplying the price per unit by the quantity sold.