Purvis Lawn Products has 5,400 shares of stock outstanding at a market price of $6.37 a share. What will the market price per share be if the company does a reverse stock split of one-for-three

The market price per share is $2.12

Explanation:

For computing the market price per share, we have to apply the method which is shown below:

= Market price * stock split ratio

where,

Market price per share is $6.37

Stock split is one for three

= $6.37 * 1 : 3

= $2.12

In stock split, we divide 1 by 3 to get the correct to get the accurate market price per share. The three for 1 fraction is wrong which gives wrong value. So, we use the one for three fraction.

Hence, the market price per share is $2.12