Which of the following statements is not true about a 2-for-1 split?
A) Par value per share is reduced to half of what it was before the split.
B) Total contributed capital increases.
C) The market price will probably decrease.
D) A stockholder with 10 shares before the split owns 20 shares after the split.

Question

Quizplus · Accepted Answer

Total contributed capital remains unchanged in a stock split. A 2-for-1 split doubles the number of shares but does not affect the total contributed capital; it merely divides the existing capital into more shares, reducing the par value per share and potentially the market price per share, while doubling the number of shares owned by each shareholder.

Which of the Following Statements Is Not True About a 2-For-1