Which of the following are valid reasons that a firm's stock split can be followed by an increase in the value of the shares of that firm?
I.Signaling.
II.Liquidity.
III.More shares outstanding.
IV.Self-selection.

Question

Quizplus · Accepted Answer

Signaling and self-selection are both valid reasons why a stock split may lead to an increase in a firm's share value. By splitting their stock, the firm may be signaling to the market that they are confident in their future prospects, which can increase investor confidence and demand for the stock. Additionally, self-selection may occur as the firm is more likely to split their stock if they believe the market will value their shares higher in the future. Liquidity and more shares outstanding are not necessarily factors that would lead to an increase in share value.

Which of the Following Are Valid Reasons That a Firm's