Which one of the following is a valid reason for a stock split?
A)To increase ownership percentages of individual shareholders
B)To adjust the market price of the shares to a level where more individuals can afford to invest in the stock
C)To increase reported net income during subsequent accounting periods
D)To increase the book value per share of common stock

Question

Quizplus · Accepted Answer

A stock split does not change the ownership percentages of individual shareholders, nor does it increase net income or book value per share. The primary purpose of a stock split is to adjust the market price of shares to a level where more individuals can afford to invest in the stock. This is typically done to make the stock more attractive to retail investors and increase liquidity.

Which One of the Following Is a Valid Reason for a Stock