The Green Florist has 15,000 shares of stock outstanding with a par value of $1 per share and a market value of $14.40 a share. The company just announced a reverse stock split of two-for-three. Currently, you own 300 shares of this stock. How many shares will you own after the reverse stock split?

Question

Quizplus · Accepted Answer

Before the reverse stock split, there were 15,000/1 = 15,000 total shares.
After the reverse stock split, each shareholder would receive 2 shares for every 3 shares they originally owned.

So, after the split, the total number of shares would be: 
15,000 x 2/3 = 10,000

To find how many shares the owner now owns, we can use a proportion:

300/15,000 = x/10,000

Simplifying this, we get:

x = (300 x 10,000)/15,000 = 200

Therefore, the owner now owns 200 shares (choice B).

The Green Florist Has 15,000 Shares of Stock Outstanding with a Par