Mercury Industries currently has 300,000 shares of stock outstanding that sell for $75 per share.Assuming no market imperfections or tax effects exist, what will be the share price after Mercury implements a 5-for-3 stock split?
A)$45.00
B)$44.02
C)$47.26
D)$37.60
E)$40.09

Question

Quizplus · Accepted Answer

The correct answer is A because after a 5-for-3 stock split, the number of shares outstanding will increase by a factor of 5/3, while the price per share will decrease by the same factor. Therefore, the new share price will be $75 * (3/5) = $45.

Mercury Industries Currently Has 300,000 Shares of Stock Outstanding That