BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$16.30
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$64.60
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$32.60
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$49.10
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Detailed explanation-1: -Stock splits can take many different forms. The most common stock splits are 2-for-1, 3-for-2 and 3-for-1. An easy way to determine the new stock price is to divide the previous stock price by the split ratio. Using the example above, divide $40 by two and we get the new trading price of $20.
Detailed explanation-2: -The existing number of shares are being divided or split. Say a company announces a stock split in the 1:2 ratio. It means for every 1 share held, it will become 2 shares, for every 100 shares held, the share count will become 200 shares.
Detailed explanation-3: -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.