Which corporate action increases the number of shares outstanding by dividing existing shares into more shares?

Which corporate action increases the number of shares outstanding by dividing existing shares into more shares?

• A. Stock Split
• B. Dividend
• C. Capital Gains
• D. Ticker Symbol

Answer: (A)

Stock splits change the number of shares by dividing each existing share into multiple shares. When a company splits, it issues more shares to shareholders in a set ratio, so the total shares outstanding increases while the price per share drops proportionally. The overall market value of the investment stays the same right after the split, just with more shares available. This is different from a dividend, which distributes cash or additional shares without the same proportional increase in outstanding shares, and from capital gains (price rise) or a ticker symbol (just the stock’s trading code). The action that increases shares outstanding by dividing existing shares into more shares is a stock split.

Stock splits change the number of shares by dividing each existing share into multiple shares. When a company splits, it issues more shares to shareholders in a set ratio, so the total shares outstanding increases while the price per share drops proportionally. The overall market value of the investment stays the same right after the split, just with more shares available. This is different from a dividend, which distributes cash or additional shares without the same proportional increase in outstanding shares, and from capital gains (price rise) or a ticker symbol (just the stock’s trading code). The action that increases shares outstanding by dividing existing shares into more shares is a stock split.