Question

Nathan noticed that a company that has great potential just declared a​ ________ because its stock price was getting too high for the small investor to buy the stock. The company will substitute more shares for the existing shares of stock without increasing the market value of the firm.

Answer 1

Answer:

Stock-split

Explanation:

A stock-split means that the existing price of one share of Nathan will be divided into two such that the two new shares will be exactly equal to one old share. Once that is done, small investors will be more comfortable buying the shares at a cheaper price.

Whether before or after the stock-split. A given amount invested will give an investor the same percentage ownership in the same company. It has only made Nathan's shares look cheaper to attract small investors while the market capitalization (overall value) of Nathan remains the same.