You are a financial consultant. Your client owns shares of Tesla, Inc. This corp
ID: 2822151 • Letter: Y
Question
You are a financial consultant. Your client owns shares of Tesla, Inc. This corporation has never had a stock split. Write a memo to your client discussing the possibility of a stock split. Explain to your client how a 2:1 split might affect their portfolio of stocks. You will need to do some research on stock splits and study the section on stock-splits from the book in Chapter 13. The Chapter 13 PowerPoint slides are a good resource. Remember to be thorough, but concise, so a maximum of two paragraphs.
Explanation / Answer
A stock split of existing shares is a process that generally increases a company's total number of outstanding equity shares without any change in the company's market value or the ownership interest of shareholders on advance approval from the company's board of directors.Tesla a leading electric vehicle manufacturing and trading global company.In current senerio , there is chances of split in shares of company to reduce the risk involved or to improve the trading volume in stock market.
Generally, a company decides to split its shares as an attempt to reduce its market trading price. As, high prices can be a deterrent to future investors , mainly smaller ones. A stock split will make such share affordable to a bigger range of investors in market .Such sudden demand will force market price at new high level . At current market condition Tesla can think for this option .
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.