A stock split a. may occur in the absence of retained earnings. b. will increase total paid-in capital. c. will increase the total par value of the stock. d. will have no effect on the par value per share of stock.

Question

Social Studies

Lainey Briggs

9 August, 20:26

A stock split a. may occur in the absence of retained earnings. b. will increase total paid-in capital. c. will increase the total par value of the stock. d. will have no effect on the par value per share of stock.

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Answers (1)

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Remington Fletcher · Answer 1

C - will increase the total par value of the stock

Explanation:

A stock split increases the total shares outstanding and decreases the par value per share. Because the number of total shares increases in the same proportion that the par value and per share decreases, the total par value of common stock does not change.

Stock split increases the number of shares in a company. A stock split causes a decrease of market price of individual shares, not causing a change of total market capital of the company.

Stock split is a decision by a company to increase the number of shares that are outstanding by issuing more shares to current shareholders. The primary motive is to make shares seem more affordable to small investors even though the underlying value of the company has not changed.