Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 69

Effects of a stock split Assume that you own 500 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $40.

Required:

a. How many shares of common stock will you own after the stock split?

---

b. What will probably happen to the market price per share of the stock?

---

c. What will probably happen to the par value per share of the stock?

Step 1 of 4

Effects of a stock split

Stock split: It is a corporate act in which existing shares of an organization's are divided into several shares.