Which of the following is NOT a valid reason for a stock split?
A) to increase the shareholder base by increasing the number of shares outstanding and making them more marketable
B) to reduce the market price of the shares so that more individuals can afford to invest in the shares
C) to increase the market price of the shares to make the stock more attractive
D) to reduce the market price of the shares to make the stock more attractive

Question

Quizplus · Accepted Answer

A stock split normally increases the number of shares outstanding and reduces the market price of each share in order to increase the liquidity and affordability of the stock. Option C, however, states that the purpose of a stock split is to increase the market price of the shares, which is not a valid reason for a stock split.

Which of the Following Is NOT a Valid Reason for a Stock