A Stock Split

question 23

Multiple Choice

A stock split:

• A) results in the dilution of the existing shareholders' interest.
• B) results in a change in the par and stated value of the stock.
• C) leads to a change in the assets of the company.
• D) leads to a change in the surplus of the company.
• E) seldom requires the approval of existing shareholders.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Retained Earnings(Deficit)

The accumulated net income of a company minus any dividends paid to shareholders, reflecting the company's earnings reinvested in its operations.

Stock Split

An action by a company to increase the number of outstanding shares by dividing each share, which typically reduces the share price but does not change the overall market capitalization.

Shares Outstanding

The total number of a company's shares of stock that are currently owned by shareholders, including restricted shares.