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In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s...

In June 2014, Apple went through a 7-for-1 stock split. Immediately after the stock split, Apple’s stock price fell from $645 per share to $94 per share. Did Apple directly pay its shareholders any cash in that event? By what percentage does the market value of Apple’s common stock increase? Why is stock split an effective way for Apple to reward common stock shareholders?

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Answer #1

Ans) No Apple didn't directly pay its shareholders any cash in that event.

Market value of stock after split = 7 * 94

= $658

Thus the percentage increase = (658 - 645)/645

= 2.02%

Stock split an effective way for Apple to reward common stock shareholders because in that way there is more number of share available in stock market which will increase the liquidity of the stock and more people can trade on this stock due to that there will be rise in stock value and eventually help the shareholder to increase their worth.

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