Generally, Managers Use a Reverse Stock Split to

question 62

Multiple Choice

Generally, managers use a reverse stock split to

• A) send a signal to investors that the company is expected to perform poorly.
• B) meet the minimum requirements to be listed on one of the major stock exchanges.
• C) increase the liquidity of shares by decreasing the number of share available.
• D) reduce the administrative costs associated with investor relations.

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Definitions:

Bonds Issued

Long-term debt instruments issued by corporations or governmental entities to investors to raise capital, with a promise to pay back the principal along with interest.

Face Value

The nominal value printed on a bond or share, representing its legal value rather than market value.

Bond Discount

The difference when bonds are sold for less than their face value, indicating investors require a higher yield due to perceived risks or interest rates being higher than the bond's rate.

Accrued Interest

Interest that has been incurred but not yet paid, often relating to bonds or loans.