NISM Certifications · NISM-Series-XV: Research Analyst · Corporate Actions
A company with a face value of ₹10 announces a stock split into shares of face value ₹2. The pre-split market price is ₹1,500. Assuming no other factors, what is the expected post-split price and the number of shares an investor holding 100 shares will have?
The post-split price is expected to be ₹300 and the investor will hold 500 shares. Splitting face value from ₹10 to ₹2 multiplies shares by five and divides the price by five, leaving total value unchanged.
- A₹300 and 500 sharesCorrect
- B₹300 and 100 shares
- C₹1,500 and 500 shares
- D₹7,500 and 20 shares
Explanation
The split factor is 10/2 = 5. Each share becomes 5 shares, so 100 shares become 500. The price falls to 1,500/5 = ₹300, keeping holding value at ₹1,50,000. Option ₹7,500 and 20 shares reverses the split into a consolidation.
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