You own 100 shares of Troll Brothers' stock,which currently sells for $120 a share.The company is about to declare a 2-for-1 stock split.Which of the following best describes your likely position after the split?
A) You will have 200 shares of stock,and the stock will trade at or near $120 a share.
B) You will have 200 shares of stock,and the stock will trade at or near $60 a share.
C) You will have 100 shares of stock,and the stock will trade at or near $60 a share.
D) You will have 50 shares of stock,and the stock will trade at or near $120 a share.
E) You will have 50 shares of stock,and the stock will trade at or near $600 a share.

Question

Quizplus · Accepted Answer

A 2-for-1 stock split means that for every share you own, you will receive two additional shares. Therefore, after the split, you will have 200 shares of stock. However, since the stock split does not change the overall value of the company, the price per share will also decrease proportionally. In this case, the stock will likely trade at or near $60 a share (half of the original price of $120).

You Own 100 Shares of Troll Brothers' Stock,which Currently Sells