A shareholder owns 200 shares of stock XYZ at $58 each. If there is a 2-1 stock split, how many shares will the shareholder have, and what will the new share price be?

Study for the MTTC Business Management, Marketing, and Technology (098) Test. Use flashcards and multiple choice questions with detailed explanations for each question. Prepare effectively for your exam!

Multiple Choice

A shareholder owns 200 shares of stock XYZ at $58 each. If there is a 2-1 stock split, how many shares will the shareholder have, and what will the new share price be?

In a 2-for-1 stock split, the number of shares doubles and the price per share halves, leaving the total value roughly the same. Starting with 200 shares at $58, doubling the shares gives 400 shares. The price per share halves: $58 ÷ 2 = $29. So you end up with 400 shares priced at $29 each, preserving the overall value (200 × 58 equals 400 × 29). Other options don’t fit the 2-for-1 rule: keeping 200 shares at $58 means no split occurred; 800 shares at $29 would require a larger split than 2-for-1; 400 shares at $58 would mean the price didn’t adjust after the split.

In a 2-for-1 stock split, the number of shares doubles and the price per share halves, leaving the total value roughly the same.

Starting with 200 shares at $58, doubling the shares gives 400 shares. The price per share halves: $58 ÷ 2 = $29. So you end up with 400 shares priced at $29 each, preserving the overall value (200 × 58 equals 400 × 29).

Other options don’t fit the 2-for-1 rule: keeping 200 shares at $58 means no split occurred; 800 shares at $29 would require a larger split than 2-for-1; 400 shares at $58 would mean the price didn’t adjust after the split.

More practice questions