Quiz Ch 14 – T/F Stock Split Effects: Signaling and Investor Preference

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition

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True or false: Anticipating a post-split price of around $25 after a 20:1 stock split with a pre-split price of $500 might not always hold true. The higher post-split price can result from signaling effects, where investors perceive improved future prospects, or from a preference for lower-priced shares.

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