All of the following are rationales given for a stock dividendor split except: a

Question

All of the following are rationales given for a stock dividendor split except:
a. The price will not fall proportionately to the shareincrease. b. An optimum price range does not exist. c. There is positive informational content associated with theannouncement. d. Conservation of corporate cash. All of the following are rationales given for a stock dividendor split except:
a. The price will not fall proportionately to the shareincrease. b. An optimum price range does not exist. c. There is positive informational content associated with theannouncement. d. Conservation of corporate cash.

Explanation / Answer

(b) is not a rationale as an optimum price rangeshould exist for a theoretical stock. (d) is a rationale because you do conserve cash (a) is a rationale because, historically, stock prices haveincreased (c) follows as a rationale from (a)

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