Canadian Securities Course (CSC) Practice Exam · Question
Which scenario is most likely to result from a reverse stock split?
A reverse stock split reduces the number of outstanding shares and proportionately increases the price per share, often done to increase a company's stock price
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Question: Which scenario is most likely to result from a reverse stock split?
Answer options:
- An increase in the number of outstanding shares and a decrease in share price. ✅ A decrease in the number of outstanding shares and an increase in share price.
- No change in the number of outstanding shares, but an increase in total market capitalization.
- An increase in the number of outstanding shares, with no change in the aggregate value of the company.
Correct answer: A decrease in the number of outstanding shares and an increase in share price.
Explanation: A reverse stock split reduces the number of outstanding shares and proportionately increases the price per share, often done to increase a company's stock price to meet listing requirements.
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