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:

Good Faith

Acting with honesty and integrity in dealings without any intent to defraud or seek an unfair advantage.

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, aiming to standardize and simplify the laws across states.

Conforming Goods

Products that meet the specifications and standards outlined in a contract for sale.

Buyers and Lessees

Buyers are individuals or entities that purchase goods or property, while lessees are those who obtain the right to use goods or property through a lease agreement.