Grant Corporation declared a 2-for-1 stock split when it had 12,000 shares of $5 par value common stock outstanding. If the market price of the stock had been $20 a share before the split, the par value, number of shares and approximate market value after the split would be: $\begin{array}{llll}&\text { Par Value No.}&\text { of Shares }&\text {Market Value }\
\text { A) } & \$ 2.50 & 24,000 & \$ 10.00 \
\text { B) } & \$ 2.50 & 24,000 & \$ 5.00 \
\text { C) } & \$ 2.50 & 12,000 & \$ 10.00 \
\text { D) } & \$ 5.00 & 24,000 & \$ 20.00
\end{array}$

Question

Grant Corporation declared a 2-for-1 stock split when it had 12,000 shares of $5 par value common stock outstanding. If the market price of the stock had been $20 a share before the split, the par value, number of shares and approximate market value after the split would be: $\begin{array}{llll}&\text { Par Value No.}&\text {  of Shares }&\text {Market Value }\
\text { A) } & \$ 2.50 & 24,000 & \$ 10.00 \
\text { B) } & \$ 2.50 & 24,000 & \$ 5.00 \
\text { C) } & \$ 2.50 & 12,000 & \$ 10.00 \
\text { D) } & \$ 5.00 & 24,000 & \$ 20.00
\end{array}$

Quizplus · Accepted Answer

In a 2-for-1 stock split, the number of shares doubles, and the par value is halved. Therefore, the par value becomes $2.50, the number of shares becomes 24,000, and the market value per share is approximately halved to $10.00.

Grant Corporation Declared a 2-For-1 Stock Split When It Had