All else equal, a normal stock split or a stock dividend:

Question

Quizplus · Accepted Answer

A stock split or stock dividend increases the number of shares outstanding, but does not change the overall value of the company. Therefore, all else equal, the per share price of the stock should decrease, not increase (option A is incorrect). A stock split or stock dividend also does not directly impact a firm's profits or earnings, so option B is incorrect. The increase in share count resulting from a stock split or stock dividend should be recognized on the balance sheet (option D is incorrect). Finally, while a stock dividend may increase the dividend per share, this is not always the case and not guaranteed, so option E is also incorrect.

All Else Equal, a Normal Stock Split or a Stock