Delta, Inc. has 420,000 shares outstanding at a market price of $33.00 a share. If the company declares a 3-for-2 stock split, they will have ____ shares outstanding at a market price of:

Question

Quizplus · Accepted Answer

In a 3-for-2 stock split, for every 2 shares an investor holds, they receive 3 shares. This increases the number of shares by a factor of 1.5 (3 divided by 2). Therefore, 420,000 shares become 630,000 shares (420,000 * 1.5). The market price adjusts inversely to the split ratio, so the new price is $33.00 divided by 1.5, which equals $22.00.