Stephanie bought 250 shares of Discover stock in 1988.Recently the company declared a four-for-one stock split.Which of the following statements is true?

Question

Quizplus · Accepted Answer

A four-for-one stock split means for every share owned, the shareholder now owns four shares. Therefore, the total number of shares increases, but the market value of each share is adjusted to be approximately one-fourth of the pre-split value to keep the total value of the investment the same. Choices A, B, and D are incorrect because Stephanie would own 1,000 shares after the split (not 750), the total value of her stock does not increase due to the split, and her percentage ownership in the company does not change.

Stephanie Bought 250 Shares of Discover Stock in 1988