Answered

Why does a company split its stock?

A. The company wants to guarantee that the stock price will increase.
B. It wants fewer shares outstanding.
C. The stock is trading at a low price, and the company wants to increase its stock value.
D. It wants the total market capitalization to be lower than the current level.
E. The stock is trading at a high price, and the company wants to bring the price in line with a theoretical ideal range.



Answer :

GinnyAnswer

Final answer:

Stock splits are strategic moves by companies to make their shares more accessible, adjust prices, and demonstrate confidence in future growth.


Explanation:

A company may decide to split its stock for various reasons:

  1. To make the stock more affordable for individual investors and increase liquidity, driving more interest in the stock.
  2. To adjust the stock price to a more desirable trading range, attracting a wider range of investors.
  3. To signal to the market that the company is confident in its future growth potential, potentially leading to an increase in stock value.

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