Modern Homes Just Declared a 4-For-3 Stock Split

question 30

Multiple Choice

Modern Homes just declared a 4-for-3 stock split.Which of the following occurred as a result of this split?
I.Number of shares outstanding increased by one-third
II.Number of shares outstanding decreased by one-fourth
III.Price per share increased by one-third
IV.Price per share decreased by one-fourth

• A)I only
• B)I and III only
• C)I and IV only
• D)II and III only
• E)II and IV only

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Definitions:

Conversion Ratio

The specific quantity of common shares an investor can receive for converting each unit of a convertible security, such as a convertible bond or preferred stock.

Par Value

The face value of a bond or stock, typically the amount that is paid back at maturity for bonds or a nominal dollar value assigned to shares of stock.

Coupon Bond

A type of bond that offers interest payments to the holder at specified intervals until the bond's maturity.

Accrued Interest

The interest that has accumulated on a bond or other fixed-income security since the last interest payment was made.