Series 7 - General Securities Representative Exam
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When is a company MOST likely to perform a reverse stock split?
To create more shares for new investor demand
A
When the stock price is too high
B
During times of financial success
C
During times of financial distress
D
Explanations
Reverse splits are usually not a good omen for a stock. They may need to keep their share price above a certain level in order to continue being listed on an exchange. The reverse split raises the price per share and lowers the amount of shares outstanding