Final answer:
Option c is the correct answer. A stock split changes the par value of each share in inverse proportion to the split ratio, while the total market value and stockholders' equity remain the same. It does not increase the market price of the stock by itself or change the proportionate ownership of the company.
Step-by-step explanation:
Regarding the effects of a stock split, option C is correct: the par value of the stock is changed in the reverse proportion as the stock split. This means that if a company performs a 2-for-1 stock split, the par value of each share is halved. In contrast to option A, a stock split does not inherently increase the market price of the outstanding stock. The market might interpret a stock split as a positive signal, but the split itself does not change the total market value of the company's shares. Option B is incorrect because a stock split does not increase stockholders' equity; it simply increases the number of shares outstanding while maintaining the same total equity. Lastly, option D is also incorrect as stockholders' proportionate ownership of the company remains the same after a split since all shares are split evenly.
The benefit of a stock split is that it can potentially make shares more affordable to a broader range of investors, which may increase their liquidity. However, it does not change the intrinsic value of the company or the rate of return through dividends or capital gains.