Which of the following is correct regarding a two-for-one stock split?
A) The purpose of the split may be to increase the number of potential stockholders.
B) The purpose of the split is to make a distribution to the stockholders.
C) After the split,each stockholder will have greater ownership interest in the corporation.
D) The value of each share of stock will increase as a result of the split.

Question

Quizplus · Accepted Answer

A two-for-one stock split is often done to lower the price of each share, making the stock more accessible to a wider range of investors, thereby potentially increasing the number of stockholders. It does not aim to distribute profits (like dividends do), nor does it increase the ownership percentage of each stockholder or the value of each share.

Which of the Following Is Correct Regarding a Two-For-One Stock