Question

Which statement about a 2-for-1 stock split is NOT true?

a) The market price will decrease.
b) Shareholders receive two shares for every one they own.
c) It increases the number of shares outstanding.
d) It does not change the total market capitalization.

Answer 1

In a 2-for-1 stock split, shareholders receive two shares for every one they own, doubling the shares outstanding and reducing the market price per share, but not changing the total market capitalization.

Step-by-step explanation:

The question asks which statement about a 2-for-1 stock split is NOT true. In a 2-for-1 stock split, shareholders do indeed receive two shares for every one they own (Statement b), which increases the number of shares outstanding (Statement c). The market price per share is expected to decrease (Statement a) because the number of shares has doubled, but the total value of the company (market capitalization) has not changed, as the split itself doesn't add real value to the company (Statement d).