Yesterday the Rockville corporation instituted a 2-for-1 split. Before the split, the market share price was $63.44 per share and the corporation had 2.3 billion shares outstanding. ?

Question

What was the pre-split market cap for Rockville?

what was the post-split number of shares outstanding for Rockville?

What was the post-split market price per share for rockville?

Answer 1

1) Pre-market cap = $63.44 * 2.3 bn shares = $145,912,000,000

2) 2.3bn *2 = 4.6 bn shares (just doubled the existing number of shares outstanding)

3) post split market price per share = $31.72/share (divide in half)

Stock splits have zero effect on overall total market cap. It only affect the number of shares outstanding and share price. In totality, we have doubled the shares outstanding but halved the share price thus rendering a zero effect on the overall market cap.