Becker Financial recently declared a 2-for-1 stock split.Prior to the split,the stock sold for $100 per share.If the firm's total market value is unchanged by the split,what will the stock price be following the split?
A) $51.50
B) $45.50
C) $50.00
D) $38.50
E) $49.00

Question

Quizplus · Accepted Answer

A 2-for-1 stock split means that for every share an investor owns, they will receive an additional share. In this case, if an investor owned one share prior to the split, they would own two shares after the split, but the total market value of their shares would remain the same.

To calculate the stock price after the split, we need to divide the previous stock price by 2 (since each share is now two shares). Therefore, the stock price after the split will be $100/2 = $50 per share. Option C) $50.00 is the correct answer.

Becker Financial Recently Declared a 2-For-1 Stock Split