Use the following information to answer the following question(s).
Your firm is planning to pay a 15% share dividend.The market price for the share has been $84.The table below presents the equity portion of your firm's balance sheet before the dividend.
Common share

-If instead of a share dividend, your firm decided to split the share 2-1, then the number of shares outstanding and their par value per share would be [blank].
A)1 million; $4
B)1 million; $8
C)2 million; $2
D)2 million; $4

Question

Use the following information to answer the following question(s).
Your firm is planning to pay a 15% share dividend.The market price for the share has been $84.The table below presents the equity portion of your firm's balance sheet before the dividend.
Common share
 
-If instead of a share dividend, your firm decided to split the share 2-1, then the number of shares outstanding and their par value per share would be [blank].
A)1 million; $4 
B)1 million; $8 
C)2 million; $2 
D)2 million; $4

Quizplus · Accepted Answer

In a 2-1 stock split, the number of shares outstanding doubles, and the par value per share is halved. If the original par value was $4 (implied from the options), after the split, it would be $2.

Use the Following Information to Answer the Following Question(s)