Bainbridge Corporation recently patented an extraordinary invention that will allow average homeowners to cheaply generate a large fraction of the electricity consumed in their houses. As a result, the market price of Bainbridge's common stock has soared to $160 per share. Bainbridge is about to announce a 4 for 1 stock split. Explain why the company would take this action?

The purpose of a stock split is to bring the per-share market price of the company's stock down into a more appropriate "trading range"-that is, a price that is appealing to a greater number of potential investors.

Answer rating: 100% (QA)

The stock price of Brainbridge Corporation has moved up significantly to 160 per share as a result o... View the full answer