Effects of a stock split
Response to the following problem:
Assume that you own 500 shares of $10 par value common stock of a company and the company has a 2-for-1 stock split when the market price per share is $40.
Required:
a. How many shares of common stock will you own after the stock split?
b. What will probably happen to the market price per share of the stock?
c. What will probably happen to the par value per share of the stock?