n NISM Certifications
VII NISM Series VII
Medium

When a company declares stock splits or consolidations in the ratio A:B, the adjustment factor is ______.

Practice question from NISM Series VII Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    A/B

  2. B/A

    Correct answer

  3. C

    AxB

  4. D

    A-B

Why this is the answer

Adjustment Factor = Post-action shares ÷ Pre-action shares. For example, a 2-for-1 split gives a factor of 1/2 (B/A).

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NISM Series VII Mock Test 3