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Douglas Corporation has 750 outstanding shares of stock. The value of each stock is $34 on...

Douglas Corporation has 750 outstanding shares of stock. The value of each stock is $34 on 5/1/2015. There was a stock split on 5/2/2015. What is the value of the stock at the end of day on 5/2/2015?
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Answer #1

It is important for a company to mention the split ratio while splitting the share.
Let us say that the shares were split in 2-1 i.e. 2 shares issued for 1 held share.
Hence, value of 1 share which is $34 will become $17 each adjusting itself in the market automatically after the split of 2-1.
Considering split of 3-1, value per share will become $11.33 per share.
The splitting depends on the company's board of director. Hence, its imp to decide the ratio of split.  

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