Question

Last week, Weschler Paint Corp. completed a 3-for-1 stock split. Immediately prior to the split, its stock sold for $150 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price? a. $52.50 b. $50.00 c. $60.78 d. $57.88 e. $55.13

Answer 1

The answer is B..

Step-by-step explanation:

Stock split is the issuing of new shares to existing shareholders according to their current holdings from the total outstanding shares. It increases the number of outstanding shares.

Post-split stock price = Current price/new per old

Number of new shares = 3

Number of old shares = 1

Pre-split stock price = $150

Therefore, post-split stock price is:

1/3 x $150

=$50