What is the fundamental purpose of a stock split?
A)A split shows the company's preference for retaining funds.
B)A split immediately brings the stock price to a lower trading range.
C)A split immediately increases the investor's wealth.
D)A split increases the threat of a hostile takeover.

Question

Quizplus · Accepted Answer

The fundamental purpose of a stock split is to bring the stock price to a lower trading range, making it more affordable for individual investors and increasing liquidity in the market. This does not necessarily increase the investor's wealth, nor does it show the company's preference for retaining funds, and it does not increase the threat of a hostile takeover.

What Is the Fundamental Purpose of a Stock Split