Which of the following is/are true regarding stock splits?

Question

Quizplus · Accepted Answer

All of the options listed are true regarding stock splits. A stock split is a method by which a firm increases the number of its outstanding shares without issuing any new capital. The corporation issues additional shares of stock to shareholders in proportion to their existing holdings, which means that existing shareholders receive more shares but their proportional ownership in the company remains the same. The company receives no additional assets, and its total par value remains the same. A firm may execute a stock split by reducing the par value of the common stock in proportion to the new number of shares issued, or by not making any change in par value but by issuing additional shares of the same par value.

Which of the Following Is/are True Regarding Stock Splits