Trading, Accounts & Prohibited ActsQuestion 221 of 398
Which statement about a forward stock split is TRUE?
a.It increases the total market value of an investor's holding
b.It is paid in cash to shareholders
c.It increases the number of shares outstanding and proportionally lowers the price per share
d.It reduces the number of shares an investor owns
Explanation
A forward split increases shares outstanding and proportionally reduces the price per share, so the total market value of a holding is unchanged immediately after the split. It is not a cash payment, and it increases, not decreases, the number of shares held.
Practice all 398 questions free — no signup required.
Related questions on this topic
- Which self-regulatory organization is chiefly responsible for regulating broker-dealers and the over-the-counter securities market in the United States?
- How does a stock dividend differ from a cash dividend for a shareholder?
- A dealer quotes stock XYZ at $15.20 - $15.35. At what price would a customer's market order to sell be executed?
- An investor enters a limit order and specifies that it should remain in effect until it executes or is canceled, even across multiple trading days. This is known as what type of order?
- Before executing a short sale, what must a broker-dealer generally do with respect to the shares being sold?
- During a company's initial public offering, an investor pays $18 per share for newly issued stock. Who receives the $18 per share?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review