Brinkley Resources stock has has increased significantly over the last five years, selling now for $175 per share Management feels this price is too high for the average investor and wants to get the price down to a more typical level, which it thinks is $25 per share What stock split would be required to get to this price, assuming the transaction has no effect on the total market value? Put another way, how many new shares should be given per one old share?
A) 6.65
B) 6.98
C) 7.00
D) 7.35
E) 7.72

Question

Quizplus · Accepted Answer

In order to reduce the stock price from $175 to $25 per share, a 7-for-1 stock split is required. This means that for every one share currently held by investors, they will receive seven new shares, resulting in a total of 8 shares (1 old share + 7 new shares) for each old share held. Therefore, the correct answer is C) 7.00.

Brinkley Resources Stock Has Has Increased Significantly Over the Last