The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a
A) liquidating dividend
B) stock split
C) stock option
D) preferred dividend

Question

Quizplus · Accepted Answer

A reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a stock split. This means that the total value of the stock remains the same, but the number of outstanding shares increases, resulting in a lower price per share. Liquidating dividends are payments made to shareholders when a company is dissolved or sold. Stock options are a form of compensation given to employees in the form of the right to purchase company stock at a fixed price. Preferred dividends are payments made to preferred stockholders, which have priority over common stock dividends.

The Reduction of Par or Stated Value of Stock by Issuance