Question

A corporation has 40,000 shares of $25 par value stock outstanding and 45,000 authorized shares. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be__________-.

Answer 1

Answer:

45,000

Explanation:

3-for-1 stock split mean outstanding stock in the market will be tripled and every investor who has one share will get 2 more and will have 3 in total.

Outstanding Shares in the market = 40000 shares

Outstanding Shares after split in the market = 40,000 shares X 3

Outstanding Shares after split in the market = 120,000 shares

As Authorized shares are the shares that a corporation is legally allowed to issue in the market. while outstanding share are those which already issued in the market.

So, after to 3 for 1 split share will be 120,000 but due to 45,000 limit the corporation cannot go beyond this limit and after split outstanding shares will be 45,000 only.