Question

Suppose you own 5% of Coastal Corporation's 400,000 outstanding common shares. The stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split. After the split, you will own _____ shares worth _____ per share.Group of answer choices

Answer 1

Answer: 30,000; $110

Step-by-step explanation:

From the question, we are informed that someone own 5% of Coastal Corporation's 400,000 outstanding common shares and that the stock was trading for $165 per share before Coastal executives announced a 3-for-2 stock split.

The share owned after the split will be:

= 5% × 400,000 × (3/2)

= 0.05 × 400,000 × 1.5

= 30,000

The price after the split will be the current price divided by the split ratio. Tgis will be:

= $165/1.5

= $110