Investors often take the stock split decision as a signal of management's confidence in the future.

Question

Quizplus · Accepted Answer

This statement is true. When a company announces a stock split, it's often interpreted as a positive signal by investors. A stock split increases the number of shares outstanding and reduces the stock price per share, making it more affordable for investors to buy. This can potentially increase demand for the stock and improve liquidity. Management may be confident in the company's future performance and growth prospects, leading to the decision to split the stock.

Investors Often Take the Stock Split Decision as a Signal