Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $120 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price?
a. $20.00 b. $25.00 c. $30.00 d. $38.73 e. $40.00
3 for 1 split implies that , one will get 3 stocks for each stock
let there be 100 stocks before split
=>
Old value = 100 * 120
New value = 100 * 3 * x
=>
new price 'x' = 100*120/100*3
= 120/3
= 40
hence choose e)
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock...
Toombs Media Corp. recently completed a 3-for-1 stock split. Prior to the split, its stock sold for $90 per share. The firm's total market value was unchanged by the split. Other things held constant, what is the best estimate of the stock's post-split price?
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