AIW, Inc.currently has 275,000 shares of stock outstanding that sell for $87 per share.Assuming no market imperfections or tax effects exist, what will be the share price after AIW implements a 7-for-3 stock split?
A)$37.29
B)$39.55
C)$36.31
D)$29.89
E)$32.38

Question

Quizplus · Accepted Answer

The correct answer is A because after a 7-for-3 stock split, the number of shares outstanding will increase by a factor of 7/3, while the price per share will decrease by the same factor. Therefore, the new share price will be $87 * 3/7 = $37.29.

AIW, Inccurrently Has 275,000 Shares of Stock Outstanding That Sell for for $87