Question

Effectively a bookkeeping adjustment undertaken by a firm that increases the number of shares outstanding and immediately causes a proportional decrease in the price of the firm’s stock. _____________

Answer 1

Answer:

This is a stock split.

Explanation:

This statement describes a stock split. It occurs when a company's board of directors decide to increase the number of company shares but still maintain the same total value of equity. An example would be a 2-1 stock split which means that every investor holding one share of the company would now hold 2 shares . One reason why a stock split occurs is when the stock price is perceived to be too expensive hence necessary to lower the price so other investors can buy it.