Stock splits can be used to:
A) adjust the market price of a stock so it falls within a preferred trading range.
B) decrease a company's excess cash thereby lowering agency costs.
C) increase the par value per share while decreasing the market price per share.
D) increase the total equity of a firm.
E) adjust the debt-equity ratio to its preferred level.

Question

Quizplus · Accepted Answer

Stock splits are typically used to adjust the market price of a stock so that it falls within a preferred trading range. By increasing the number of shares outstanding and decreasing the stock price, a stock split can make the stock more accessible to a wider range of investors. This can help to increase liquidity and trading volume, which can be beneficial for both the company and its shareholders.

Stock Splits Can Be Used To