Mario's has 18,000 shares of stock outstanding with a par value of $1.00 per share and a market price of $33 a share. The ﬁrm just announced a 5-for-3 stock split. What will the par value of the
Stock be after the split?

Question

Quizplus · Accepted Answer

In a 5-for-3 stock split, the number of shares increases by a factor of 5/3, and the par value decreases by the reciprocal factor of 3/5. Thus, the new par value is $1.00 * (3/5) = $0.60.

Mario's Has 18,000 Shares of Stock Outstanding with a Par