City Center Pharmacy has 24,500 shares of stock outstanding with a par value of $1 per share and a market value of $18.90 a share. The company just announced a reverse stock split of three-for-five. What will be the market value per share after the reverse stock split?

Question

Quizplus · Accepted Answer

In a reverse stock split of three-for-five, the number of shares decreases, but the total market value remains the same. The new market value per share is calculated by multiplying the current market value per share by the ratio of the reverse split (5/3). Thus, $18.90 * (5/3) = $31.50.

City Center Pharmacy Has 24,500 Shares of Stock Outstanding with a Par