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

Question

Quizplus · Accepted Answer

After a two-for-one stock split, the number of shares owned by an investor doubles, but the market price per share typically drops to half its pre-split value to maintain the same total market value of the investment. Therefore, the market price per share will likely drop by 50%, not increase or change the total market value of the shares owned.