You Own 100 Shares of Troll Brothers' Stock, Which Currently

question 4

Multiple Choice

You own 100 shares of Troll Brothers' stock, which currently sells for $120 a share. The company is contemplating a 2-for-1 stock split. Which of the following best describes what your position will be after such a split takes place?

• A) You will have 200 shares of stock, and the stock will trade at or near $120 a share.
• B) You will have 200 shares of stock, and the stock will trade at or near $60 a share.
• C) You will have 100 shares of stock, and the stock will trade at or near $60 a share.
• D) You will have 50 shares of stock, and the stock will trade at or near $120 a share.

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Definitions:

Initial Recognition

The first accounting entry for an asset or liability, marking its introduction in the financial statements at its fair value.

Financier Lessor

An entity engaged in the business of leasing out assets, typically providing the finance to purchase the asset which is then leased to the user.

Lease Receivable

An asset representing the right to receive future lease payments from lessees under lease agreements, reflecting the value of the asset leased out.

Operating Leases

Leases in which the lessee obtains the right to use an asset for a short period of time, without assuming the risks and rewards of ownership.