Lea owns 800 shares of ABC incorporation. On April 6th the corporation instituted a 5-for-2 stock split. Before the split, each share was worth $42.60.

Question

A. How many shares did Lea hold after the split?

B. What was the post split price per share?

C. Show that the split was a monetary non-event dor Lea. 

Answer 1

Brooklin,

 

The split was 5 for 2

 

So for 800 shares Lea gets 800*5/2 = 2000 shares

 

Before split value was $42.60, after split value is $42.6*2/5 = $17.04

 

It is a non event since total value remains same

 

Value before split = 800*42.60 = $34080

 

Value after split = 2000*17.04 = $34080