SIE practice questioneasyStock Splits
When a company declares a 2-for-1 stock split, what happens?
- AThe number of shares is reduced by half.
- BThe number of shares doubles, and the price per share is halved.✓ Correct answer
- CThe value of the investment doubles.
- DShareholders lose voting rights.
Explanation
Why B — The number of shares doubles, and the price per share is halved.
A 2-for-1 split doubles shares and halves price, leaving total value unchanged. The other choices misstate the effects or consequences of splits.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Equity Securities questions
- Book value of a company's stock is best described as:
- A warrant is best described as:
- Treasury stock refers to shares that:
- American Depositary Receipts (ADRs) allow U.S. investors to:
- Which feature allows a corporation to repurchase its preferred shares at a predetermined price?
- What is a typical right of common stockholders?
- Convertible preferred stock can be exchanged by the shareholder for:
- Shareholders are sometimes offered rights, which give them the ability to: