Attractive investment for a larger set of investors


Smelling Company declared a 2- for- 1 stock split on its common stock in order to intentionally reduce the market value of its stock so that it would be an attractive investment for a larger set of investors. The company's common stock is described as follows:

Common stock: 100,000 shares outstanding, $ 10 par value, originally sold at $ 12.50, current market price $ 50.

Describe the likely impact, if any, that the 2- for- 1 stock split will have on:

a) the number of shares outstanding,

b) the market price of the stock, and

c) the total stockholders' equity attributable to common stock.

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Accounting Basics: Attractive investment for a larger set of investors
Reference No:- TGS069773

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