SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 7: Answer and Explanation

Question: 7

Which of the following would represent the impact a three-for-one stock split would have on the par value of a share of stock?

• A. The par value would be the same as the old share.
• B. The par value would be one-third as much as the old share.
• C. The par value would be one-third more than the old share.
• D. The par value would be three dollars per share.

Correct Answer: B

Explanation:

B: Choice B expresses the change in the par value from a three-for-one stock split. Choices A and C are incorrect. Choice D would be correct only if the par value was three dollars before the stock split.