Question

You own 300 shares of Omega Co. with a value of $10 per share. As a result of a 2-for-1 stock split, you now own 600 shares and your wealth has increased by Blank______.

Multiple choice question.

$1,500


$0


$300


$3,000

Answer 1

In a 2-for-1 stock split, the number of shares you own doubles, but the price per share halves.

Before the split, you had 300 shares at $10 each, so your total wealth was:
\[
300 \text{ shares} \times 10 \text{ dollars/share} = 3,000 \text{ dollars}
\]

After the 2-for-1 stock split, you now have 600 shares, and the price per share is now:
\[
\frac{10 \text{ dollars}}{2} = 5 \text{ dollars/share}
\]

So your total wealth post-split is:
\[
600 \text{ shares} \times 5 \text{ dollars/share} = 3,000 \text{ dollars}
\]

Since your wealth remains the same at $3,000 before and after the split, the increase in your wealth is:
\[
3,000 \text{ dollars} - 3,000 \text{ dollars} = 0 \text{ dollars}
\]

Therefore, your wealth has increased by **$0**.