Question

Which of the following statements accurately explains why the board of directors of a company whose financial future contains some uncertainties might issue a 2-for-1 stock split rather than declare a 100% stock dividend?

A) A stock split would not reduce the market price per share, whereas a stock dividend would.

B) A stock split would reduce the market price per share, whereas a stock dividend would not.

C) A stock split would increase total stockholders' equity, whereas a stock dividend would not.

D) A stock split would not reduce Retained Earnings, whereas a stock dividend would.

Answer

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