You own 100 shares of Troll Brothers' stock, which currently sells for $120 a share. The company is about to declare a 2-for-1 stock split. Which of the following best describes your likely position after the split?

You will have 100 shares of stock, and the stock will trade at or near $60 a share. You will have 200 shares of stock, and the stock will trade at or near $60 a share. You will have 50 shares of stock, and the stock will trade at or near $600 a share. You will have 200 shares of stock, and the stock will trade at or near $120 a share. You will have 50 shares of stock, and the stock will trade at or near $120 a share.

Question

Business

Peter Nixon

24 September, 16:04

You own 100 shares of Troll Brothers' stock, which currently sells for $120 a share. The company is about to declare a 2-for-1 stock split. Which of the following best describes your likely position after the split?

You will have 100 shares of stock, and the stock will trade at or near $60 a share. You will have 200 shares of stock, and the stock will trade at or near $60 a share. You will have 50 shares of stock, and the stock will trade at or near $600 a share. You will have 200 shares of stock, and the stock will trade at or near $120 a share. You will have 50 shares of stock, and the stock will trade at or near $120 a share.

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Answers (1)

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Nayeli Davila · Answer 1

You will have 200 shares of stock, and the stock will trade at or near $60 a share.

Explanation:

When a company declares a 2-for-1 stock split, its shares' value is cut by half, while the number of stocks of each share holder doubles.

If, before the split, the stock had a value of $120 per share, after the stock split it will sell for close to $60 a share.

If you previously had a position of 100 shares of Troll Brothers' stock, after the 2-for-1 split you will have 200 shares.

Therefore, you will have 200 shares of stock, and the stock will trade at or near $60 a share.