Tangshan Mining has 100,000 shares outstanding and just declared a 3-for-2 stock split. Before the announcement, the firm's shares were trading at $50.00 per share. After the stock split, the firm's shares should trade at ________ per share.
A) $33.33
B) $66.67
C) $75.00
D) $100.00

Question

Quizplus · Accepted Answer

In a 3-for-2 stock split, for every 2 shares an investor owns, they receive 3 shares. This increases the number of shares but reduces the price per share so that the total value remains the same. If the shares were trading at $50 before the split, after the split, each share would trade at $50 * (2/3) = $33.33 to keep the overall market capitalization of the company constant.

Tangshan Mining Has 100,000 Shares Outstanding and Just Declared a 3-For-2