When a Corporation Declares a Stock Split, It Usually Does

question 71

Multiple Choice

When a corporation declares a stock split, it usually does so because

• A) the firm's retained earnings are excessive.
• B) there are too many shares of stock outstanding.
• C) investors sometimes require nontaxable returns.
• D) it wants to make its stock more affordable to average investors.

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Definitions:

Equilibrium Price

The price at which the supply of a good matches its demand in the market, leading to a stable situation where everything supplied is sold.

Cockatoos

A group of colorful and intelligent birds belonging to the parrot family, often known for their crested head feathers.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in market equilibrium.

Marginal Cost

The change in total cost that arises when the quantity produced is incremented by one unit.