In a Three for Two Stock Split for a Company

question 31

Multiple Choice

In a three for two stock split for a company that previously had 1 million shares outstanding selling at $100 per share and a total market value of $100 million, which of the following is true:

• A)the number of outstanding shares will drop to 666,666, and the stock price will increase to $150.
• B)the number of outstanding shares will increase to 1.5 million, and the stock price will drop to $66.67.
• C)the number of outstanding shares will increase to 1.5 million, and the stock price will rise to $133.33.
• D)the market value of the firm will increase.

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Definitions:

Standard Error of the Mean

The standard deviation of the sampling distribution of the mean, showing how much the sample mean is expected to vary from the true population mean.

Population Averages

The mean value of a particular characteristic in a population, representing the central tendency of that characteristic across the entire population.

Alternative Hypothesis

The hypothesis that proposes a specific relationship between variables, tested against the null hypothesis in statistical analysis.

One-sample Z-test

A statistical test used to determine whether the mean of a sample significantly differs from a known or hypothesized population mean.