A Reverse Stock Split

question 2

Multiple Choice

A reverse stock split

• A) occurs when a company wants to increase the price of its common stock because the market hasn't recognized the improvements the company has made in achieving profitability.
• B) exchanges fewer new shares of common for old shares of common stock.
• C) will not change earnings per share.
• D) is more popular in bull markets than in bear markets.

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Definitions:

Debit Memo

A document issued by a buyer to a seller indicating a reduction of the amount due to the seller, often due to returned goods or discrepancy in billing.

Price Allowance

A reduction in the selling price, often used as a promotional strategy or to compensate for minor defects.

Returns Of Merchandise

The process of customers returning previously purchased merchandise back to the seller, typically due to defects or dissatisfaction.

Delivery Expense

Costs incurred by a company to transport its products to customers, including freight and shipping fees.