Common Stock
A company announces a 4-for-1 stock split. Which statement is TRUE?
In a 4-for-1 forward split, each share becomes 4 shares, and the price is divided by 4. Proportionate ownership remains exactly the same. The split increases shares outstanding 4x and reduces price to 1/4. Market capital
Complete Analysis & Legal Rationale
In a 4-for-1 forward split, each share becomes 4 shares, and the price is divided by 4. Proportionate ownership remains exactly the same. The split increases shares outstanding 4x and reduces price to 1/4. Market capitalization is unchanged.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Matches the verified teaching point in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.