Mid-State BankCorp recently declared a 7-for-2 stock split.Prior to the split,the stock sold for $120 per share.If the firm's total market value is unchanged by the split,what will the stock price be following the split?
A) $39.77
B) $34.29
C) $35.31
D) $27.77
E) $41.49

Question

Quizplus · Accepted Answer

In a 7-for-2 stock split, for every 2 shares someone owned, they now have 7 shares. The price adjusts so the total value remains the same. If the pre-split price was $120, then post-split, each of the 7 shares would be worth $120 divided by (7/2), which equals $34.29.

Mid-State BankCorp Recently Declared a 7-For-2 Stock Split