The value of a share of stock currently selling for $50 after a 1 for 5...
The value of a share of stock currently selling for $50 after a 1 for 5 split is
Homework Answers
1-for-5 stock split implies that for every 1 stock held, there would be 5 stocks outstanding post stock split. However, this does not lead to an overall change in market value of company. This implies market value pre-split and post-split would be same.
Number of shares pre-split * Price per share pre-split = Number of shares post-split * Price per share post-split
1 * $50 = 5 * Price per share post-split
Price per share post split = $10
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