BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1800
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450
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900
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1350
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Detailed explanation-1: -In a 2-for-1 stock split, the corporation issues an additional share of stock to the shareholder for each share the shareholder owns. You now own 200 shares, but your total basis is still $1, 500.
Detailed explanation-2: -Calculating total shares after stock split Shareholders who wish to estimate the total number of shares that they will own after a stock split can use the following formula: Total number of shares post stock split = number of shares held * number of new shares issued for each existing share.
Detailed explanation-3: -For 20 shares, a shareholder will receive 100 additional shares after a bonus issue. Thus, the total shares held by the shareholder after the bonus issue will be 120 (100+20). For a 1:3 stock split, each share will be split into 3 shares.
Detailed explanation-4: -A stock split increases the number of outstanding shares and therefore increases the liquidity of the shares. However, the total amount of the shares stays the same, since the split does not change the stock’s valuation.