Question

A corporation has 40,000 shares of $25 par value stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be:

A. 120,000 shares
B. 40,000 shares
C. 80,000 shares
D. 13, 333 shares

Answer 1

After a 3-for-1 stock split, the number of shares outstanding will be 120,000 shares.

Step-by-step explanation:

A stock split is a decision made by a corporation to increase the number of shares outstanding without changing the total value of the company. In this case, the corporation has 40,000 shares of $25 par value stock outstanding. A 3-for-1 stock split means that for every 1 share held by a shareholder, they will receive 3 new shares. So, after the split, the number of shares outstanding will be 40,000 x 3 = 120,000 shares.