A reverse stock split
A) occurs when a company wants to increase the price of its common stock because the market hasn't recognized the improvements the company has made in achieving profitability.
B) means the company exchanges fewer new shares in place of more older shares.
C) eliminates any previous stock dividend.
D) is more popular in bull markets than in bear markets.

Question

Quizplus · Accepted Answer

In a reverse stock split, the company reduces the number of outstanding shares and exchanges them for a lesser number of new shares. This is done to increase the market price per share and is often used by companies whose stock price has fallen too low, making it unattractive to investors or not meeting certain stock exchange requirements. It does not eliminate stock dividends and is not necessarily more popular in bull markets than bear markets.

A Reverse Stock Split