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 before the split is described as follows.

Common stock: 100,000 shares outstanding, $10 par value, originally sold at $12.50, current market price $50.

Describe the expected impact, if any, that the 2-for-1 stock split will have on

a.The number of shares outstanding.

• The stock split will reduce the number of shares outstanding by half of the current number.
• The stock split will double the number of shares outstanding.
• The stock split will triple the number of shares outstanding.

b.The market price of the stock.

• The split will reduce the market price of the stock to half of its current price.
• The split will not affect the market price of the stock.
• The stock split will triple the number of shares outstanding.

c.The total stockholders' equity attributable to common stock.

• The split will have no impact on the total stockholders' equity attributable to common stock.
• The total stockholders' equity will increase.
• The total stockholders' equity will decrease.