Asked by Jason Vowels on Jun 18, 2024
Verified
Suppose BREXX Corp. believes its recent stock price increase has made the price of the stock too expensive for the average investor. To remedy this situation, BREXX could ________________.
A) Pay a liquidating dividend.
B) Complete a reverse stock split.
C) Pay a regular cash dividend.
D) Execute a stock repurchase.
E) Complete a stock split.
Stock Split
A corporate action in which a company divides its existing shares into multiple ones to boost the liquidity of the shares, though the company's market capitalization remains unchanged.
Average Investor
A term referring to a hypothetical investor who represents the median market participant, with typical financial goals and risk tolerance.
Stock Price
The market value of a single share of a company's stock.
- Acquire knowledge on the influence of stock transactions, including stock splits and reverse stock splits, on market price, liquidity, and the value held by shareholders.
Verified Answer
SF
Shelby FrankJun 20, 2024
Final Answer :
E
Explanation :
Completing a stock split is a strategy companies use to lower the price of their stock by increasing the number of shares available, making the stock more accessible to average investors without changing the overall market capitalization of the company.
Learning Objectives
- Acquire knowledge on the influence of stock transactions, including stock splits and reverse stock splits, on market price, liquidity, and the value held by shareholders.