Question

In the case of a 2-for-1 stock split being declared, which of the following statements is true?

1) The number of shares held by each shareholder will double
2) The value of each share will double
3) The total value of the company will double
4) The company will issue new shares to existing shareholders

Answer 1

In the case of a 2-for-1 stock split, the number of shares held by each shareholder will double, but the value of each share and the total value of the company will not double.

Step-by-step explanation:

When a company declares a 2-for-1 stock split, the number of shares held by each shareholder will double. This means that if an investor initially had 100 shares, they will now have 200 shares after the split. However, the value of each share will not double. The total value of the company will also not double. The split does not create new shares but rather divides the existing shares into a larger number of shares with a lower value.