ABC has 61,000 shares of $16.00 par common stock outstanding.ABC announces a stock split of 4-for-1.What is the effect of the split?

Question

Quizplus · Accepted Answer

A 4-for-1 stock split means that for every 1 share owned, the shareholder will receive 3 additional shares. Therefore, the total number of shares will increase by a factor of 4, making the new total 244,000 shares (61,000 x 4). The par value of the stock will also decrease to reflect the split, in this case dropping to $4.00 per share.

ABC Has 61,000 Shares of $16