You own 100 shares of Troll Brothers stock, which currently sells for $120 a share. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

Question

Quizplus · Accepted Answer

A 2-for-1 stock split means that for every one share you own, you will receive two shares. Therefore, if you own 100 shares, after the split you will have 200 shares. Since the stock split does not affect the overall value of the company, it is likely that the stock price will be adjusted accordingly, in this case to $60 per share. Therefore, after the split, you will have 200 shares of stock, and the stock will trade at or near $60 a share (Choice B).

You Own 100 Shares of Troll Brothers Stock, Which Currently