Robinson's has 15,000 shares of stock outstanding with a market price of $6 a share.What will be the market price per share if the firm does a 1-for-3 reverse stock split?

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Quizplus · Accepted Answer

In a 1-for-3 reverse stock split, every three shares are combined into one share. Therefore, the number of shares decreases to 15,000 / 3 = 5,000 shares. The total market value remains the same, so the new price per share is (15,000 shares * $6) / 5,000 shares = $18.

Robinson's Has 15,000 Shares of Stock Outstanding with a Market