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3-for-1 stock split

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10. If a firm executed a 3-for-1 stock split, you would expect that the value of

a. an investment in the firm should increase because having 3 stocks is clearly better than 1.
b. each new stock should be approximately 3 times the value of the original stock
c. each new stock should be approximately equal to the value of the original stock
d. each new stock should be approximately one-third of the value of the original stock
e. all of the above would be essentially equally probable outcomes

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10. If a firm executed a 3-for-1 stock split, you would expect that the ...

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Response discusses 3-for-1 stock split

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A company has just announced a 3-for-1 stock split, effective immediately. Prior to the split, the company had a market value of $5 billion with 100 million shares outstanding. Assuming that the split conveys no new information about the company, what is the value of the company, the number of shares outstanding, and price per share after the split? If the actual market price immediately following the split is $17.00/share, what does this tell us about market efficiency?

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