The Helga’s Health board of directors feels the stock price for its No

QUESTION

The Helga’s Health board of directors feels the stock price for its Norwegian herbal supplements company has become too high and is pricing out potential investors. What action should the board take?

A) lower the par value of its stock
B) increase dividends to lower the market value
C) issue a 2-for-1 stock split
D) convert the stock to bonds
E) recalculate the stock’s book value

ANSWER

Answer: C
Explanation: C) In a stock split, a company divides its existing shares into multiple shares. The number of shares increases, but the total value of the shares remains the same, thus lowering the share price.