A company whose share is selling for $24 announces a stock split of four-for-three.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

A four-for-three stock split means for every three shares an investor owns, they receive one additional share, resulting in a total of four shares for every three originally held. This increases the total number of shares by one-third, not four times or three times. The new share price is calculated by dividing the old share price by the split ratio (4/3). Therefore, $24 divided by (4/3) equals $18, not $96, $8, or $32.

A Company Whose Share Is Selling for $24 Announces a Stock