Stock splits result in: A higher cost per share for all shares than before the stock...

Stock splits result in:

		A higher cost per share for all shares than before the stock split.
		A lower cost per share for all shares than before the stock split.
		An increase in the total cost of the old and new stock combined.
		A decrease in the total cost of the old and new stock combined.
		None of the above statements are correct.

Expert Solution

Answer)

The correct answer is: Stock Split result in A lower cost per share for all shares than before the stock split.

The cost per share post stock split is calculated by dividing the total cost of shares before stock split divided by the total number of shares after split.

The following options are incorrect:

· A higher cost per share for all shares than before the stock split: This option is incorrect as the total cost all shares remains the same and therefore cost per shares post stock split can’t increase.

· An increase in total cost of the old and new stock combined: This option is incorrect as total cost of old and new shares remain the same, only the number of shares are increased and cost per share is decreased.

· An decrease in total cost of the old and new stock combined: This option is incorrect as total cost of old and new shares remain the same, only the number of shares are increased and cost per share is decreased.

ekkarill92 answered 1 year ago

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