Which of the following is not a side effect of a stock split?
A) There is no effect on retained earnings account
B) Investors face no tax implications
C) The average share price will be reduced to reflect the split
D) There will be no change in the number of shares outstanding

Question

Quizplus · Accepted Answer

A stock split increases the number of shares outstanding and decreases the share price accordingly. This can make the stock more affordable for investors and increase liquidity. However, it does not affect the retained earnings account, and there are no tax implications for investors. Therefore, options A and B are not side effects of a stock split. Option C is actually a side effect of a stock split, as the average share price will be reduced. The only choice that is not a side effect of a stock split is D, as there will be an increase in the number of shares outstanding.

Which of the Following Is Not a Side Effect of a Stock