Series 7 practice questioneasyEquity Securities — Stock Splits
An investor owns 200 shares of XYZ Corp at $60 per share. After a 3-for-1 stock split, what will the investor hold?
- A600 shares at $20 per share✓ Correct answer
- B200 shares at $180 per share
- C66 shares at $180 per share
- D600 shares at $60 per share
Explanation
Why A — 600 shares at $20 per share
In a 3-for-1 stock split, the number of shares triples while the price per share is divided by three. The investor's total market value remains the same: 200 x $60 = $12,000 = 600 x $20. Stock splits do not change the total value of the investment.
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