Question

Suppose you own 5% of Coastal Corporation's 400,000 outstanding common shares. The stock was trading for $135 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.

Answer 1

Answer:

number of share 30,000 share

price per share = $90

Explanation:

given data:

investor's share = 5%

outstanding share =400,000

stock split = 3/2

number of share after spliting = investor share* outstanding share* stock split

                                                  = 5%*400,000*(3/2)

                                                   = 30,000 share

per share price can be determined by using following relation:

$price\ per\ share =\frac{ outstanding\ share*\ trading\ price * investor's\ share}{ number\ of \ share\ after \ splittg}$

                             $= \frac{40000 *135*0.05}{30000}$

                               = $90