Canadian Securities Course (CSC) Practice Exam · Question
Which of the following describes a stock split?
A stock split increases the number of outstanding shares by a multiple while proportionally reducing the stock's market price. This makes shares more accessible
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Question: Which of the following describes a stock split?
Answer options: ✅ An increase in the number of outstanding shares, resulting in a proportional decrease in the share price.
- A decrease in the number of outstanding shares, resulting in a proportional increase in the share price.
- The conversion of common shares into preferred shares.
- The issuance of new shares to existing shareholders without affecting the share price.
Correct answer: An increase in the number of outstanding shares, resulting in a proportional decrease in the share price.
Explanation: A stock split increases the number of outstanding shares by a multiple while proportionally reducing the stock's market price. This makes shares more accessible to a broader range of investors.
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