When a company exchanges 200 shares of stock worth $20 each for 100 shares worth $40 each,they are using
A) tracking stock.
B) holding stock.
C) a leveraged buyout.
D) reverse stock split.
E) split stock.

Question

Quizplus · Accepted Answer

This is an example of a reverse stock split, where a company reduces the number of its existing shares to increase the per-share price, without changing the company's overall market capitalization. In this case, 200 shares at $20 each are consolidated into 100 shares at $40 each.

When a Company Exchanges 200 Shares of Stock Worth $20