Final answer:
In a 2-for-1 stock split, both the market price per share and the par value per share are decreased, though the ownership interest of the shareholders remains the same. This adjustment increases the number of shares while making them more affordable without changing the company's market capitalization. the correct answer is option d) both market price per share and par value per share are decreased.
Step-by-step explanation:
When a corporation undertakes a 2-for-1 stock split, they are essentially doubling the number of shares available while halving the price of each share. This leads to the correct answer: d. both market price per share and par value per share are decreased. This split does not alter the total value of the shareholders' investment or ownership interest; it only changes the number of shares they hold and the individual price and par value of each share.
The par value is the nominal value of the stock as stated in the corporate charter, and this is reduced proportionately when a stock split occurs. Similarly, the market price per share declines to reflect the increase in the number of shares available, presumably making the stock more attractive and affordable to potential investors. However, the overall market capitalization of the company remains the same, as does the percentage of ownership that each shareholder has in the company.