Abby previously owned 200 shares of a NEWAGE stock at $25 per share. Today the company split the stock in a 3:1 split. Now what is the value of Abby's stock?
Her total investment is the same, but she has three times as many shares. Each share is now worth 1/3 of the former price.
To determine the value of Abby's stock after the split, we need to consider the ratio of the split and the original price.
In a 3:1 stock split, for every 3 shares a shareholder owns, they will receive 1 additional share. So, Abby will now have three times the number of shares she previously had.
1. First, we calculate the new number of shares Abby owns:
Number of shares after the split = Number of shares before the split * Split ratio
Number of shares after the split = 200 shares * 3
Number of shares after the split = 600 shares
2. Next, we calculate the new value of Abby's stock:
Value of stock after the split = Number of shares after the split * Price per share
Value of stock after the split = 600 shares * $25 per share
Value of stock after the split = $15,000
Therefore, the value of Abby's stock after the 3:1 stock split is $15,000.