Question

A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be a.50,000 shares b.100,000 shares c.150,000 shares d.16,666 shares

Answer 1

Answer:

Option C

Number of shares outstanding after split = 150,000 units

Explanation:

A stock split occurs where a company creates additional shares in units such the total nominal value of the outstanding shares remains the same. With a stock split, the total outstanding shares increases without a change in the total nominal value while the nominal value per share reduces.

Total shares before the split = 50,000

Total outstanding shares after split

= 50,000 × 3 = 150,000

Number of shares outstanding after split = 150,000 units