Assume That You Own 1,500 Shares of $10 Par Value

question 34

Multiple Choice

Assume that you own 1,500 shares of $10 par value common stock and the company has a 5-for-1 stock split when the market price per share is $30. How many shares of common stock will you own after the stock split?

• A)1,500 shares, but they will be worth 5 times as much each.
• B)300 shares.
• C)7,500 shares.
• D)1,500 shares but they will be worth 1/5 as much each.

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Definitions:

Disaffirm Contracts

The legal ability of one party, often a minor or someone not fully competent, to declare a contract void and release themselves from any contractual obligations.

Necessaries

Goods or services that are essential for maintaining a person's health, education, comfort, or welfare.

Reasonable Value

The fair or market value of a service or item, determined by considering what a willing buyer would pay and a willing seller would accept.

Parents Responsible

An obligation or duty of parents to take care of, make decisions for, and financially support their children.