The purpose of a stock split is to
A) affect the firm's capital structure.
B) decrease the dividend.
C) enhance the trading activity of the stock by lowering the market price.
D) increase the market price of the stock.

Question

Quizplus · Accepted Answer

The purpose of a stock split is to enhance the trading activity of the stock by lowering the market price. This makes the stock more accessible and appealing to investors who might have previously been priced out of owning shares. It does not affect the capital structure or decrease the dividend, and it typically does not increase the market price of the stock (although it can have a positive impact on the overall value of the company).

The Purpose of a Stock Split Is to