Question
a small company has 5000 shares. lauren owns 200 of these shares. the company decides to split its shares. what is lauren's percent ownership after the split?
A. 2%
B. 10%
C. 4%
D. 5%
A. 2%
B. 10%
C. 4%
D. 5%
Answers
GPT-4o mini
To determine Lauren's percent ownership after the share split, we first need to understand how a share split operates. A share split increases the number of shares outstanding without changing the overall value of the company or the ownership percentage of the individual shareholders.
Let's say the company decides to split the shares, for example, in a 2-for-1 split. This means that for every one share a person owns, they will now own two shares.
Currently, Lauren owns 200 shares out of a total of 5000 shares, which gives her an ownership percentage of:
\[
\frac{200}{5000} \times 100 = 4\%
\]
After the split (regardless of the split ratio), Lauren will still own 200 shares but the total number of shares will increase. For a 2-for-1 split, the total number of shares would then be:
\[
5000 \times 2 = 10000 \text{ shares}
\]
Even though the total number of shares has increased, Lauren's percentage ownership remains the same:
\[
\frac{200}{10000} \times 100 = 2\%
\]
Thus, if the shares were split, Lauren's ownership percentage would remain consistent based on her share count relative to the new total.
If we apply the same logic to any share split (for example, 3-for-1 or 10-for-1), Lauren's percent ownership would remain at:
\[
4\%
\]
To answer your question directly regarding how Lauren's ownership percentage is calculated based on the options provided:
- Since Lauren owns 200 out of 5000, which is inherently a 4% ownership (200/5000 = 0.04, or 4%).
Regardless of how the shares are split, her percentage ownership remains 4%.
Therefore, the answer is **C. 4%**.
Let's say the company decides to split the shares, for example, in a 2-for-1 split. This means that for every one share a person owns, they will now own two shares.
Currently, Lauren owns 200 shares out of a total of 5000 shares, which gives her an ownership percentage of:
\[
\frac{200}{5000} \times 100 = 4\%
\]
After the split (regardless of the split ratio), Lauren will still own 200 shares but the total number of shares will increase. For a 2-for-1 split, the total number of shares would then be:
\[
5000 \times 2 = 10000 \text{ shares}
\]
Even though the total number of shares has increased, Lauren's percentage ownership remains the same:
\[
\frac{200}{10000} \times 100 = 2\%
\]
Thus, if the shares were split, Lauren's ownership percentage would remain consistent based on her share count relative to the new total.
If we apply the same logic to any share split (for example, 3-for-1 or 10-for-1), Lauren's percent ownership would remain at:
\[
4\%
\]
To answer your question directly regarding how Lauren's ownership percentage is calculated based on the options provided:
- Since Lauren owns 200 out of 5000, which is inherently a 4% ownership (200/5000 = 0.04, or 4%).
Regardless of how the shares are split, her percentage ownership remains 4%.
Therefore, the answer is **C. 4%**.