Asked by Dusty Taylor on Jul 04, 2024
Verified
In a reverse stock split,the number of outstanding shares is reduced while the market price per share stays the same.
Reverse Stock Split
When the number of outstanding shares is reduced and the market price per share is increased; as the price per share increases, the investor perceives that the stock is worth more.
Outstanding Shares
The total number of all shares issued to investors by a corporation.
- Evaluate the effects of reverse stock splits on outstanding shares and market price per share.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
False
Explanation :
In a reverse stock split, the number of outstanding shares is reduced, but this typically results in an increase in the market price per share, as the value of the company remains the same but is now distributed among fewer shares.
Learning Objectives
- Evaluate the effects of reverse stock splits on outstanding shares and market price per share.