The correct statements are Splitting shards increases the stream's ingest and read capacity and Merging shards reduces the stream's capacity and cost. Splitting shards increases the stream's ingest and read capacity adds additional shards which raises the aggregate write and read throughput for the stream and Merging shards reduces the stream's capacity and cost combines shards which lowers throughput and typically reduces cost.

Splitting shards increases the stream's ingest and read capacity is right because each new shard contributes to the total ingest and read limits so you scale out by adding shards. Merging shards reduces the stream's capacity and cost is right because merging reduces the number of shards and lowers the stream's provisioned throughput and cost when demand is lower.

To reduce overall capacity, you should split underutilized cold shards is incorrect because splitting increases capacity and it is merging that you should perform to reduce capacity and cost when shards are underutilized.

During resharding, data from parent shards is discarded is incorrect because parent shards remain readable until they are closed and records are retained according to the stream retention period so resharding does not drop existing data immediately.

Amazon Kinesis Data Firehose can automatically split and merge shards in a Kinesis Data Stream is incorrect because Firehose does not manage shard counts on Kinesis Data Streams and resharding is performed on the stream itself.

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