Increase in Outstanding Capital Stock: Exam Question Answer for CFA® Level 1 Test Prep

Factors Affecting Outstanding Capital Stock Increase

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Question

Which of the following could increase outstanding capital stock?

Answers

Explanations

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A. B. C. D. E.

Explanation

All of these answers would cause a firm's capital stock to increase. While the exercise of stock options or warrants offers a price to the buyer that is more favorable than the firm's current market price, these still result in the issuance of new shares. Likewise, the conversion of bonds to stock swaps debt for equity and the payment of stock dividends means that the firm is issuing new shares.