Which is true for a 2 for 1 stock split?

In a 2-for-1 stock split, the number of outstanding shares is doubled and the price is reduced by half. The total market value (market cap) of the issuer's stock remains the same.The investor will receive an additional 100 shares from a 3 for 2 stock split.

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Notice and Proxy Statement to effect a 2-for-1 split of outstanding...

Notice Statement Outstanding

Name: Notice and Proxy Statement to effect a 2-for-1 split of outstanding common stock
Brand: US Legal Forms
Price: 59.00 USD
Rating: 4.69 (480 reviews)

Category:

Corporations - Public - Changes Affecting Capital Stock

State:

Multi-State

Control #:

US-CC-3-212N

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Instant download

Description

This sample form, a detailed Notice and Proxy Statement to Effect a 2-for-1 Split of Outstanding Common Stock document, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.

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How to fill out Notice And Proxy Statement To Effect A 2-for-1 Split Of Outstanding Common Stock?

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FAQ

Divide your per share basis by the number of new shares you received for each old share in the first stock split. For example, if your stock split five new shares for every old share, divide $25 by 5 to get a new basis of $5 per share.

Take the original investment amount ($10,000) and divide it by the new number of shares you hold (2,000 shares) to arrive at the new per-share cost basis ($10,000/2,000 = $5). Take your previous cost basis per share ($10) and divide it by the split factor of 2:1 ($10.00/2 = $5).

If the stock undergoes a 2-for-1 split before the shares are returned, it simply means that the number of shares in the market will double along with the number of shares that need to be returned. When a company splits its shares, the value of the shares also splits.

In a 2-for-1 stock split, the number of outstanding shares is doubled and the price is reduced by half. The total market value (market cap) of the issuer's stock remains the same.The investor will receive an additional 100 shares from a 3 for 2 stock split.

While a stock split adjusts the price of an option's underlying security, the contract is adjusted so that any changes in price due to the split do not affect the value of the option.

For example, in a 2-for-1 stock split, an additional share is given for each share held by a shareholder. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split.

A 2 for 1 stock split results in twice the number of shares at half the price. The holder of an option contract as a result of a 2 for 1 stock split will now have twice as many option contracts at half the strike price.

What happens to an option if the underlying stock has a 3-for-1 split? The exercise price would become one third of what it was and the number of options held would triple.

A stock split will cause certain financial ratios to be refigured, but no changes to the corporate financial reports.The earnings per share is the amount of net income for the quarter or the year divided by the stock price. A split changes the stock price without affecting earnings, so EPS declines.

Notice Statement Outstanding

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