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When the Price of a Stock Rises Significantly Higher Than

question 38

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When the price of a stock rises significantly higher than that can be justified by the dividends the firm can be expected to pay in future,a(n) _____ is said to have occurred.


Definitions:

Stock Split

A corporate action that increases the number of shares outstanding by issuing more shares to current shareholders, affecting share price.

Market Value

The existing cost at which a commodity or service is available for buying or selling in the market.

Shares Outstanding

The total number of shares that are currently owned by all shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which may lower the stock price and make shares more affordable to investors.

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