SIE practice questioneasyStock Splits
An investor owns 200 shares of a stock at $80 per share. After a 2-for-1 stock split, the investor will have:
- A100 shares at $160 per share
- B200 shares at $40 per share
- C200 shares at $80 per share
- D400 shares at $40 per share✓ Correct answer
Explanation
Why D — 400 shares at $40 per share
In a 2-for-1 stock split, the number of shares doubles while the price per share is halved, keeping the total value the same. 200 shares become 400 shares, and the price adjusts from $80 to $40. Total value before: 200 x $80 = $16,000. Total value after: 400 x $40 = $16,000. Stock splits make shares more accessible to retail investors without changing the company's market capitalization.
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