All of the following are true of stock splits EXCEPT:

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Which of the following statements concerning a two-for-one stock split is true?
Posted by:
Shahbaz Hayder
08-June-2015

1. market price per share is reduced after the split.

2. the number of outstanding shares is increased.

3. retained earnings are changed.

4. proportional ownership is unchanged.

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Question added by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date Posted: 2015/06/12

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8 Answers

by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Yes Option3 is the right answer.

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by Ahmer Zamir , Consultant , Saleem Associates & Co

The correct option is3) The retained earnings are changed

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by mehfooz alam khan habib khan , Security Incharge , Landmark Group (Emax)

Option3..............===...........

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by lakshminarasimham mallareddi , Manager Finance & Accounts , M/s. Vandana Global Limited, Raipur, Chhattisgarh

correct answer is4. proportional ownership is unchanged is not true of stock splits

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by PRADEEP VELAYUDHAN , Chief Accountant , Super Group

3) retained earnings are not changed

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by Tranquilino Jr Rivera , General Accountant , Enany Group of Companies

Answer is3. Retained Earnings are changed. After a stock split, the account balances in the stockholders' equity are UNCHANGED. A stock split is one way for the directors to make a stock more enticing to the investing public for it results to a lower market price.

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