Reverse stock splits have which of following effects on the number of shares outstanding?
A)A reverse split reduces the increases of shares outstanding.
B)A reverse split reduces the decreases of shares outstanding.
C)A reverse split has no effect on the number shares outstanding.
D)A reverse split reduces the number of shares outstanding in proportion to the debt outstanding.

Question

Quizplus · Accepted Answer

A reverse stock split reduces the number of shares outstanding by combining multiple shares into one share. This means that the overall number of shares decreases, but the value per share increases. Therefore, a reverse split reduces the decreases of shares outstanding.

Reverse Stock Splits Have Which of Following Effects on the Number