Last week, Weschler Paint Corp.completed a 3-for-1 stock split.Immediately prior to the split, its stock sold for $150 per share.The firm's total market value was unchanged by the split.Other things held constant, what is the best estimate of the stock's post-split price?

Question

Quizplus · Accepted Answer

In a 3-for-1 stock split, each share is divided into 3 shares, thus reducing the price per share to a third of its pre-split value. If the pre-split price was $150, the post-split price would be $150 / 3 = $50.00. The total market value remains unchanged; only the share price and number of shares outstanding are affected.

Last Week, Weschler Paint Corp