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16 July, 10:16

A corporation has 10,000 shares of $100 par stock outstanding. If the corporation issues a 5-for-1 stock split, the number of shares outstanding after the split will be 40,000.

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  1. 16 July, 10:34
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    Wrong, the total number of shares outstanding will be 50,000.

    Explanation:

    The corporation is issuing a 5-for-1 stock split, that means that for every 1 outstanding stock, four more will be created ( = 1 + 4 = 5 total). So if the company currently has 10,000 shares outstanding, the total number of shares will increase to: 10,000 x 5 = 50,000.

    The par value of the stock should decrease to $20 ( = $100 par value / 5)
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