1711Stock split.

If a company declares a4-for-1stocksplit, the price before the split is $90, and the price after the split is

$22.5,show that a current shareholder is no better off after the split. Current shareholders are no better off after the4-for-1split because if they ownedoneshareat $90per share before thesplit, they would then own

1/4,

4,

5,

1

shares worth $22.5each immediately after the split. (Select from thedrop-down menu.)

1712 Stock price around stock split.

Southwest Tires declares a5-for-2stock split. The current price is $70pershare, and you own100shares. What is the expected share price after thesplit? What is your wealth before thesplit? After?