Kelly owns 10,000 shares in McCormick Spices,which currently has 500,000 shares outstanding.The stock sells for $86 on the open market.McCormick's management has decided on a two-for-one split.
a.Will Kelly's financial position change after the split,assuming that the stock's price will fall proportionately?
b.Assuming only a 35% decrease in the stock price,what will be Kelly's value after the split?

Question

Kelly owns 10,000 shares in McCormick Spices,which currently has 500,000 shares outstanding.The stock sells for $86 on the open market.McCormick's management has decided on a two-for-one split.
a.Will Kelly's financial position change after the split,assuming that the stock's price will fall proportionately?
  b.Assuming only a 35% decrease in the stock price,what will be Kelly's value after the split?

Quizplus · Accepted Answer

The Answer of Kelly owns 10,000 shares in McCormick Spices,which currently has 500,000 shares outstanding.The stock sells for $86 on the open market.McCormick's management has decided on a two-for-one split.
a.Will Kelly's financial position change after the split,assuming that the stock's price will fall proportionately?
  b.Assuming only a 35% decrease in the stock price,what will be Kelly's value after the split?

Kelly Owns 10,000 Shares in McCormick Spices,which Currently Has 500,000