Paiva Corporation Splits Its Common Stock 2 for 1 When

question 95

Multiple Choice

Paiva Corporation splits its common stock 2 for 1 when the market value is $80 per share. Prior to the split Paiva had 100000 shares of $10 par value common stock issued and outstanding. After the split the par value of the stock

• A) remains the same.
• B) is reduced to $2 per share.
• C) is reduced to $5 per share.
• D) is reduced to $20 per share.

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Definitions:

Positive Profits

A financial situation where the revenues generated by a business exceed its costs, leading to a net gain.

Fallacy of Composition

The erroneous belief that what is true for an individual or part will also be true for a group or the whole.

Income

Money received by a person or household over a certain period of time from work, investments, business ventures, or other sources.

Fallacy of Composition

The erroneous belief or argument that what is true for a part is necessarily true for the whole group or entity.