Suppose a ﬁrm wishes to have its stock listed on an exchange but its share price is not high enough to meet the exchange's speciﬁed minimum price level. How might the ﬁrm remedy this situation and
Reduce the number of shares outstanding at the same time?

Question

Quizplus · Accepted Answer

A reverse stock split involves reducing the number of outstanding shares and increasing the share price. This would enable the firm to meet the exchange's minimum price level requirement while reducing the number of shares outstanding. The other options (paying a liquidating dividend, stock dividend, or regular cash dividend, or executing a stock split) would not necessarily increase the share price or reduce the number of shares outstanding.

Suppose a ﬁRm Wishes to Have Its Stock Listed on an Exchange