ABC has 53,000 shares of $19.00 par common stock outstanding.ABC announces a stock split of 4-for-1.What is the effect of the split?

Question

Quizplus · Accepted Answer

A 4-for-1 stock split means that for every 1 share of the original stock, the shareholder will receive 4 new shares. Therefore, the total number of shares will increase by a factor of 4, making it 53,000 x 4 = 212,000 shares. Since the par value is divided equally among the new shares, the new par value will be $19.00/4 = $4.75 per share. Therefore, the correct choice is C.

ABC Has 53,000 Shares of $19