SIE Exam Question 599: Answer and Explanation

Question: 599

Which of the following is/are correct regarding stock splits and reverse stock splits?

(1) A 3-for-1 stock split will decrease a stock's market price per share.

(2) A reverse stock split is intended to increase a stock's market price per share.

  • A. (1) only
  • B. (2) only
  • C. Both (1) and (2) are correct.
  • D. Neither (1) or (2) are correct.

Correct Answer: C

Explanation:

A 3-for-1 stock split will decrease a stock's market price per share. A reverse stock split is intended to increase a stock's market price per share.

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