Identify and define three reasons for stock splits
What will be an ideal response?
Answer: Although stock splits appear to have no impact on the value of the firm, they do regularly occur and three popular reasons have been identified for their existence. First, one can argue that stocks are more popular if they trade in a preferred trading range. A price range of $20-$40 per share allows investors to purchase modest amounts of stock in round lots of one hundred shares per lot. This helps reduce transaction costs on a per share basis and may support broad market participation by a greater number of investors.
A second reason for stock splits is that they send a signal to investors. As stock prices rise above preferred trading ranges, management sends a signal to investors that says stock prices are unlikely to return to preferred (lower) prices without a positive split.
Finally, lower prices per share and more outstanding shares provide greater liquidity, thus making it easier for more investors to trade the stock. However, this argument is not well-supported by empirical evidence and tends to be downplayed by investors.
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An on-the-run ten-year Treasury security is
A. a ten-year government bond that is in greatest demand by investors who want to hold it until it matures. B. a ten-year government bond that can be used to pay estate taxes, also known as a flower bond. C. a non-taxable ten-year government bond. D. a ten-year government bond that was the most recently issued.
Which of the following is true of creative tactics in relation to advertising messages?
A. They involve determining what the advertising message will say or communicate. B. They deal with avoiding the creation of animatics for testing a commercial. C. They deal with avoiding the factors which lead to divergence in advertising creativity. D. They involve determining how much the advertising campaign will cost. E. They involve determining how the message strategy will be executed.
The hardware components of an information system will act as a(n) ________.
A. bridge between the computer side and the human side B. functional anchor on the human side C. actor on the human side D. instruction on the computer side E. actor on the computer side
The traditional organizational chart of a company is being flattened. This likely represents a movement toward
A) centralization. B) a hierarchy in which lines of authority pass from the CEO down through multiple managers. C) responsibility accounting. D) decentralization. E) all of these.