Asked by Alexia Keobangsy on Jun 08, 2024
Verified
The primary purpose of a stock split is to
A) increase paid-in capital
B) reduce the market price of the stock per share
C) increase the market price of the stock per share
D) increase retained earnings
Stock Split
A corporate action to increase the number of outstanding shares by dividing each share, which typically lowers the stock price but does not affect the company's market value.
Market Price
The contemporary market price for transactions involving an asset or service.
- Discern the intentions and effects associated with stock splits and stock dividends regarding par value, market value, and shareholders' equity.
Verified Answer
SC
Sahasawat ChaloemrotJun 08, 2024
Final Answer :
B
Explanation :
A stock split increases the number of outstanding shares while decreasing the market price of the stock per share. This is done in order to make the stock more affordable and accessible to a larger number of investors. It does not directly affect paid-in capital, retained earnings, or the market price of the stock per share.
Learning Objectives
- Discern the intentions and effects associated with stock splits and stock dividends regarding par value, market value, and shareholders' equity.
Related questions
A Corporation Has 50,000 Shares of $28 Par Stock Outstanding ...
Which of the Following Statements Is Not True About a ...
A Stock Split Results in the Reduction of the Par ...
A Company Had the Following Stockholders' Equity on January 1 ...
Morgan's Has 9,000 Shares of Stock Outstanding with a Par ...