General Education Development (GED) Practice Exam

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Prepare for the GED Test with our comprehensive quiz. Practice with detailed questions and explanations to build your confidence and get ready to pass your exam!

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A shareholder owns 200 shares of stock XYZ at $58 each. If there is a 2-1 stock split, how many shares will that shareholder have, and what will the new share price be?

100 shares at $116 per share
200 shares at $116 per share
400 shares at $29 per share
400 shares at $58 per share

The correct answer is: 400 shares at $29 per share

In a 2-for-1 stock split, each shareholder receives an additional share for every share they already own. This means that the total number of shares owned doubles. In this case, the shareholder initially has 200 shares. After the split, this number would increase to 400 shares. Additionally, the price of the stock is also adjusted in a stock split to reflect the increased number of shares. Since there is a 2-for-1 split, the price per share is halved. The original price per share was $58. After the split, the new share price would become $29 ($58 divided by 2). Therefore, following a 2-for-1 stock split, the shareholder will have 400 shares, and the price will be $29 per share. This aligns perfectly with the correct answer.