Trading & MarketsQuestion 92 of 125
A reverse stock split (for example, 1-for-5) results in a shareholder holding:
a.More shares at a lower price
b.The same number of shares at a higher price
c.More shares at the same price
d.Fewer shares at a proportionally higher price, with total value roughly unchanged
Explanation
In a 1-for-5 reverse split, every five shares become one, so the shareholder holds one-fifth as many shares at roughly five times the price, leaving total market value approximately unchanged. Companies often use reverse splits to raise the per-share price, sometimes to meet exchange listing requirements.
Practice all 125 questions free — no signup required.
Related questions on this topic
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Series 7 General Securities Representative Exam · How we review