Question

Georgey's Pawn Shop had 1,000 shares of its $1.00 par value common stock issued and outstanding Before a 2 for 1 stock split. Each of the shares had a market value of $8.00 per share. AFTER the 2 for 1 stock split, which of the following statements is FALSE? The market value of each share should be $4.00 The par value per share would be $.50 per share The number of shares issued and outstanding would be 2,000 None of the above (i.e., all of the above statements are 'True' After the 2 for 1 stock split).

Answer 1

Answer:

None of the above(i.e., all of the above statements are 'True' After the 2 for 1 stock split).

Explanation:

Stock split is a way of increasing total of shares a company's shareholders have while proportionately reducing the share price per unit.In essence , it is about re-denominating the shares of a company.

A 2-1 stock split means for every one share that shareholders possess previously.they now have 2 in place of 1.

In other words,the shareholders now have 2,000 shares in all(2/1*1000)

The par value now=$1*1/2=$0.50

The market price now=$8*1/2=$4

Without mincing words,the last option is the correct answer.