A company's stock was trading at $72.45 right before the company conducted a 7-for-1 stock split. The stock will be trading at what price immediately after the split?
A company's stock was trading at $72.45 right before the company conducted a 7-for-1 stock split. The stock will be trading at what price immediately after the split?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A company's stock was trading at $72.45 right before the company conducted a 7-for-1 stock split. The stock will be trading at what price immediately after the split?
Expert Solution
Step 1
A stock split is a corporate action where the existing shares are split into more shares depending upon the split ratio. The number of shares increases and the price decreases proportionately such that there is no change in total wealth. A 7 for 1 stock split means that each share will be split into 7 shares.
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