Homework Answers
Jesse had 2000 shares of OOP Inc. currently trading at $1.25.
OOP Inc. implements a 1:8 reverse stock split (consolidation)
This means that the company OOP Inc. gave 1 share for every 8 shares - (old shares are converted)
(Consolidation means conversion of many things to a single effective thing )
This means that Jesse will own 250 Shares ( 2000/8) but correspondingly the trading price will also be $10 ($1.25*8)
NOTE: There is no added or lost value in reverse stock split ( NO change in MARKET CAPITALIZATION)
ANSWER: A.) The value of Jesse's investment will not change because of the consolidation.
All the rest options are eliminated
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