Which statement about a "reverse stock split" is correct?
A)The economic position of the investors is diluted after a stock split.
B)The economic position of the investors is increased after a stock split.
C)The economic position of the investors is decreased after a stock split.
D)The economic position of the investors is unaffected after a stock split.

Question

Quizplus · Accepted Answer

A reverse stock split does not inherently change the economic position of investors. It consolidates the number of existing shares into fewer, proportionally more valuable shares, but the overall value of shareholders' equity remains the same, just distributed over fewer shares.

Which Statement About a "Reverse Stock Split" Is Correct