A three-for-one stock split results in which of the following, compared to before the split?
A) Three times as many shares; the same total book value of equity; one-third the market price per share.
B) Three times as many shares; three times the total book value of equity; three times the market price per share.
C) One-third as many shares; the same total book value of equity; one-third the market price per share.
D) One-third as many shares; one-third the total book value of equity; one-third the market price per share.

Question

Quizplus · Accepted Answer

In a three-for-one stock split, shareholders end up with three times as many shares as they had before, but the total book value of the company's equity remains unchanged because the split does not affect the company's underlying value. Consequently, the market price per share typically adjusts to one-third of its pre-split level to reflect the increase in the number of shares.

A Three-For-One Stock Split Results in Which of the Following