Levi owns 100 shares of stock in Epic Electronics that currently sell for $100 per share. Epic just announced a two-for-one stock split for all current stockholders. Levi now owns $20,000 worth of stock in Epic Electronics.

Question

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The purpose of stock splits is to reduce the market price of the stock so that more investors will buy and sell this particular issue. A two-for-one stock split doubles Levi's current holdings from 100 shares to 200 shares. The price of each share will drop to $50.00. The value of Levi's investment in Epic is still the same: $10,000.

Levi Owns 100 Shares of Stock in Epic Electronics That