B) Increase the number of shares while proportionally decreasing the price per share. A stock split increases shares outstanding and reduces price per share proportionally; total value stays the same.

Stock splits:

A Change total market capitalization

B Increase the number of shares while proportionally decreasing the price per share

C Increase total equity

D Change earnings

✓ Correct Answer: Option B

A stock split increases shares outstanding and reduces price per share proportionally; total value stays the same.

💡 Why is B) the correct answer?

The correct answer to the question "Stock splits:" is Option B: Increase the number of shares while proportionally decreasing the price per share.

The other options — A) Change total market capitalization, C) Increase total equity, D) Change earnings — are incorrect for this CFA Exam Prep question. As explained above: A stock split increases shares outstanding and reduces price per share proportionally; total value stays the same.

📚 About This CFA Exam Prep Practice Question

This 1-level CFA Exam Prep question from the Corporate Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

Practice CFA Exam Prep Quizzes → Browse All Questions Study Flashcards

Stock splits:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

Related CFA Exam Prep Questions