ABC has 45,000 shares of $10 par common stock outstanding. They offer a stock split of 4-for-1. The effect of the split will be:

Question

Quizplus · Accepted Answer

A 4-for-1 stock split means that for every one share of stock, you will receive four new shares. In this case, ABC has 45,000 shares outstanding and with the split, there will be a total of 45,000 x 4 = 180,000 shares outstanding. Since the par value is $10, it will drop to $10/4 = $2.50 per share. Therefore, the correct answer is C.

ABC Has 45,000 Shares of $10 Par Common Stock Outstanding