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.