Igor Corp declared a two-for-one stock split. Tina Sother owned 500 shares of Igor that were trading for $20 each before the split. Which of the following is true?
A) The total market value of Tina's shares will double.
B) The market price per share will drop by 50%.
C) The market price per share will increase by 100%.
D) The number of shares Tina owns will increase by 50%.

Question

Quizplus · Accepted Answer

A two-for-one stock split means each share will be split into two, effectively doubling the number of shares outstanding. In this case, Tina Sother's 500 shares will become 1000 shares, but the market price per share will be cut in half. Therefore, the total market value of Tina's shares will remain the same, but the market price per share will drop by 50%.

Igor Corp Declared a Two-For-One Stock Split