All of the following statements are true about a 3-for-1 split, except:
A) Total contributed capital increases.
B) The market price will probably decrease.
C) Par value per share is reduced to one-third of what it was before the split.
D) A stockholder with twenty shares before the split owns sixty shares after the split.

Question

Quizplus · Accepted Answer

In a 3-for-1 stock split, the total contributed capital does not increase. A stock split simply increases the number of shares outstanding while reducing the price per share accordingly, without affecting the total contributed capital of the company.

All of the Following Statements Are True About a 3-For-1