Question

A $20 par value stock in a 2:1 stock split will yield a new par value of

A) $40.
B) $30.
C) $10
D) no change.

Answer 1

After a 2:1 stock split, the new par value of a $20 stock will be $10, as the number of shares doubles but the par value per share is halved.

Step-by-step explanation:

The question asks what the new par value of a stock will be after a 2:1 stock split. A stock split is a corporate action that increases the number of a company's outstanding shares by issuing more shares to current shareholders. For a $20 par value stock undergoing a 2:1 split, the number of shares will double, but the par value of each share will be halved. Thus, the new par value after a 2:1 stock split would be $10 (Option C).