Final answer:
A stock split does not change the total market value of an investor's holdings, as it simply increases the number of shares while proportionally reducing the price of each share, leaving the overall value unchanged.
Step-by-step explanation:
The statement that the total market value of an investor's holdings in a company will not change as a direct result of a stock split is True. A stock split is a corporate action where a company divides its existing shares into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same because the split does not add any real value. The intrinsic value of the company doesn't change, and neither does the value of the investor's total holdings.
When a company issues stock, it's seeking investment, and those who buy the stock become shareholders and own a part of the company. This ownership is represented in shares. For example, corporate giants like IBM, AT&T, and Microsoft all have millions of shares of stock. After stocks are issued, when they are bought and sold on the stock market, the company does not receive financial returns from these transactions; these are exchanges between shareholders.
Another key concept in stock trading is the capital gain, which is the increase in the stock's value from the time it is bought to when it is sold. However, this is distinct from the effects of a stock split, which doesn't inherently change the stock's value per se.