SIE Understanding Trading, Customer Accounts and Prohibited Activities Practice Question 54

Question: 54

Which of the following does NOT occur when a reverse stock split is approved by the board of directors?

A. The new shares may have twice the par value of the old shares.

B. The firm buys shares from shareholders to reduce the quantity of shares outstanding.

C. One new share is exchanged for two old shares.

D. The new shares will begin trading at twice the price of the old shares.