You own 12,000 shares of a company. The company announces a two-for-one stock split. You will wind up with two shares for every one share you own now. How many shares do you own after the split?

Question

Business

Sarahi Frost

30 April, 01:06

You own 12,000 shares of a company. The company announces a two-for-one stock split. You will wind up with two shares for every one share you own now. How many shares do you own after the split?

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Answers (1)

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Villarreal · Answer 1

The correct answer is: 24,000 shares.

Explanation:

Sometimes the price of a company's outstanding shares grows so much that it could discourage average investors because a high price may make the stock be harder to sell. In this case, the firm can split the number of outstanding shares into two (2) or more. The number of stocks investors will have is multiplied proportionally to the split but the value of each stock will be divided.

Therefore, if the initial amount of shares is 12,000 and a two-to-one split is made, the number of shares the investor will have after the split is: 12,000 x 2 = 24,000 shares.