Question Content Area A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be a. 50,000 shares b. 16,666 shares c. 100,000 shares d. 150,000 shares
Question
Question Content Area A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be
a. 50,000 shares b. 16,666 shares c. 100,000 shares d. 150,000 shares
Solution
In a 3-for-1 stock split, each existing share is divided into three new shares. Therefore, to find the number of shares after the split, you multiply the current number of shares by the split ratio.
Step 1: Identify the current number of shares, which is 50,000 shares.
Step 2: Identify the split ratio, which is 3-for-1.
Step 3: Multiply the current number of shares by the split ratio.
50,000 shares * 3 = 150,000 shares
So, the number of shares outstanding after the split will be 150,000 shares. Therefore, the correct answer is:
d. 150,000 shares
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