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.
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