The result of a stock split is:
A) A larger number of more valuable shares.
B) An increase in corporate assets.
C) An increase in shareholders' equity.
D) A larger number of less valuable shares.

Question

Quizplus · Accepted Answer

A stock split increases the number of shares outstanding while reducing the price per share. This results in a larger number of less valuable shares for existing shareholders. For example, if a company does a 2-for-1 stock split, each shareholder will receive two shares for every one they previously owned, but the price per share will be cut in half. Therefore, the total value shareholders hold in the company remains the same, but they own more shares at a lower price per share.

The Result of a Stock Split Is