When a corporation declares a stock split, it usually does so because
A) the firm's retained earnings are excessive.
B) there are too many shares of stock outstanding.
C) investors sometimes require nontaxable returns.
D) the stock price is too high.

Question

Quizplus · Accepted Answer

When a corporation declares a stock split, it usually does so because the stock price is too high. A stock split aims to lower the stock price by increasing the number of outstanding shares while simultaneously reducing the value of each share. This makes the stock more affordable for individual investors and can increase liquidity in the market.

When a Corporation Declares a Stock Split, It Usually Does