Smelling Company declared a 2-for-1 stock split on its common stock in order to intentionally reduce the market value of its stock so that it would be an attractive investment for a larger set of investors. The company’s common stock is described as follows:
Common stock: 100,000 shares outstanding, $10 par value, originally sold at $12.50, current market price $50.
Describe the likely impact, if any, that the 2-for-1 stock split will have on
(a) The number of shares outstanding,
(b) The market price of the stock, and
(c) The total stockholders’ equity attributable to common stock.

  • CreatedApril 17, 2014
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