Ask Question
BusinessBusiness
14 July, 06:09

If you have 40 shares of stock each worth $450 and then the stock splits. How many shares of stock do you have and what is their value

+1
Answers (1)
  1. 14 July, 06:29
    0
    I. In a 2-for-1 stock split: I have 80 shares of stock each worth $225

    II. In a 4-for-1 stock split: I have 160 shares of stock each worth $112.50

    Explanation:

    Stock splits is used by publicly trading companies to control the investments of investors; it is used to determine per-share stock price of investors. In a stock split, a company makes public its intention of distributing certain number of new shares for every existing share.

    Number of shares (before the split) = 40, Share price (before the split) = $450

    I. Let's assume the company does a 2-for-1 stock split, we have:

    a) Number of shares (after the split) = Number of shares (before the split) * split ratio

    In a 2-for-1 stock split, the ratio is 2:1 = 2

    Number of shares (after the split) = 40 * 2 = 80

    That means that after the stock split, I now have 80 shares (twice the initial number)

    b) In a 2-for-1 stock split, the share price of stock reduces by the ratio of 2

    Share price (after the split) = Share price (before the split) : Split ratio

    Share price (after the split) = $ (450 : 2) = $225

    Share price (after the split) = $225

    The value of the stock (after the split) is $225 (half the initial worth)

    II. Let's assume the company does a 4-for-1 stock split, we have:

    a) Number of shares (after the split) = Number of shares (before the split) * split ratio

    In a 4-for-1 stock split, the ratio is 4:1 = 4

    Number of shares (after the split) = 40 * 4 = 160

    That means that after the stock split, I now have 160 shares (four times the initial number)

    b) In a 4-for-1 stock split, the share price of stock reduces by the ratio of 4

    Share price (after the split) = Share price (before the split) : Split ratio

    Share price (after the split) = $ (450 : 4) = $112.50

    Share price (after the split) = $112.50

    The value of the stock (after the split) is $112.50 (a fourth of the initial worth)

    In the real sense, the only thing that changed is the per-share stock price of the investors
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If you have 40 shares of stock each worth $450 and then the stock splits. How many shares of stock do you have and what is their value ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Consider the supply of peanut butter. 1) Which of the following would cause a movement along the supply curve (a change in the quantity supplied) for peanut butter? Check all that apply.
Answers (1)
Vacation pay payable is reported on the balance sheet as a (n): A) current liability B) long-term liability C) expense D) current liability or long-term liability, depending upon when the vacations will be taken by employees
Answers (1)
Courts apply the bill of rights to business corporations because they are:
Answers (1)
Adelphia Manufacturing issued $70,000 of direct materials and $10,000 of indirect materials for production.
Answers (1)
Marissa is preparing a cash budget for the Chief Financial Officer. What is this an example of?
Answers (1)
New Questions in Business
During Burns Company's first year of operations, credit sales totaled $156,000 and collections on credit sales totaled $113,000. Burns estimates that bad debt losses will be 1.0% of credit sales.
Answers (1)
A rational decision maker takes an action only if the a. marginal benefit is greater than both the average cost and the marginal cost. b. marginal benefit is greater than the marginal cost. c. marginal benefit is less than the marginal cost. d.
Answers (1)
Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $110,500, and it estimates that 6% will be uncollectible. Required: 1.
Answers (1)
Which skills are most required for someone in Design? A) knowledge of building processes, knowledge of specialized tools, and knowledge of building laws B) drawing skills, creativity for new ideas, and ability to model large-scale building projects
Answers (1)
Stock X has a standard deviation of 22 percent per year and stock Y has a standard deviation of 8 percent per year. The correlation between stock A and stock B is. 21.
Answers (1)
Home » Business » If you have 40 shares of stock each worth $450 and then the stock splits. How many shares of stock do you have and what is their value
Sign Up Forgot Password?