On September 1,2018,Maryland Corporation's common stock was selling at a market price of $200 per share.On that date,Maryland announced a 3 for 2 stock split.At what price would you expect the stock to trade immediately after the split goes into effect?

Question

Quizplus · Accepted Answer

In a 3 for 2 stock split, each shareholder would receive 3 shares for every 2 shares held. Therefore, the number of outstanding shares would increase by 50%. This would cause the price per share to adjust accordingly. After the split, the new market price per share would be $133.33 (($200/2)*3)). Therefore, the best choice is C.

On September 1,2018,Maryland Corporation's Common Stock Was Selling at a Market