Mathematically Explain How a Stock Split Works If a Company

question 18

Essay

Mathematically explain how a stock split works if a company has 100,000 common shares outstanding that are trading at $100 per share.

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Definitions:

Gift Causa Mortis

A gift made by a person in contemplation of imminent death, which becomes effective only upon the death of the donor.

Consignment

An arrangement where goods are placed in the care of another, but ownership remains with the supplier until the goods are sold.

Bailor

An individual who entrusts their property into the care of another (the bailee).

Bailment

The legal relationship arising when one person (the bailor) gives possession of an object to another person (the bailee) under the agreement that it will be returned or otherwise disposed of according to the direction of the bailor.