Question

Suppose you own 5% of Coastal Corporation's 400,000 outstanding common shares. The stock was trading for $135 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

Answer 1

number of share 30,000 share

price per share = $90

Step-by-step explanation:

given data:

investor's share = 5%

outstanding share =400,000

stock split = 3/2

number of share after spliting = investor share* outstanding share* stock split

= 5%*400,000*(3/2)

= 30,000 share

per share price can be determined by using following relation:

`price\  per\  share =( outstanding\  share*\  trading\ price * investor's\  share)/( number\  of \ share\  after \ splittg)`

`= (40000 *135*0.05)/(30000)`

= $90