Poff Industries' Stock Currently Sells for $120 a Share

question 40

Multiple Choice

Poff Industries' stock currently sells for $120 a share.You own 100 shares of the stock.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 $60 a share.
• B) You will have 100 shares of stock, and the stock will trade at or near $60 a share.
• C) You will have 50 shares of stock, and the stock will trade at or near $120 a share.
• D) You will have 50 shares of stock, and the stock will trade at or near $60 a share.
• E) You will have 200 shares of stock, and the stock will trade at or near $120 a share.

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Definitions:

Statutory Restrictions

Legal limitations placed on a company, which can affect its operations and practices, often set by government regulations.

Contractual Restrictions

Limitations imposed by a contract, dictating what parties can or cannot do as per the agreement terms.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Stockholders' Claims

The rights of shareholders to a company's assets, often in the context of liquidation or dividend distributions.