SIE Exam Question 599: Answer and Explanation

Question: 599

Which of the following is/are correct regarding stock splits and reverse stock splits?

(1) A 3-for-1 stock split will decrease a stock's market price per share.

(2) A reverse stock split is intended to increase a stock's market price per share.

• A. (1) only
• B. (2) only
• C. Both (1) and (2) are correct.
• D. Neither (1) or (2) are correct.

Correct Answer: C

Explanation:

A 3-for-1 stock split will decrease a stock's market price per share. A reverse stock split is intended to increase a stock's market price per share.