Forward & Reverse Stock Splits

Question 1

Example:

2:1

What type of Stock Split is this?

Answer 1

Forward Stock Split

Question 2

Example:

1:2

What type of Stock Split is this?

Answer 2

Reverse Stock Split

Question 3

Example:

Exchange of Two Shares in Return for One Share

What type of Stock Split is this?

Answer 3

Forward Stock Split

Question 4

Example:

Exchange of One Share in Return for Two Shares

What type of Stock Split is this?

Answer 4

Reverse Stock Split

Question 5

Example:

Exchange of Eight Shares in Return for Five Shares

What type of Stock Split is this?

Answer 5

Forward Stock Split

Question 6

Example:

Exchange of Three Shares in Return for Nine Shares

What type of Stock Split is this?

Answer 6

Reverse Stock Split

Question 7

Example:

7:4

What type of Stock Split is this?

Answer 7

Forward Stock Split

Question 8

Example:

6:9

What type of Stock Split is this?

Answer 8

Reverse Stock Split

Question 9

Purpose:
- Lowers Current Stock Price
- Increases Stock Price Affordability
- Increases Public Access

What type of Stock Split is this?

Answer 9

Forward Stock Split

Question 10

Purpose:
- Raises Current Stock Price
- Decreases Stock Price Affordability
- Avoids Delisting of the Security

What type of Stock Split is this?

Answer 10

Reverse Stock Split

Question 11

Calculate:
Original Shares Owned: 75
Original Share Price: $39.75

5:7

What type of Stock Split is this?
What is the New Number of Shares Owned?
What is the New Share Price?

Answer 11

This is a Reverse Stock Split

Calculate New Shares Owned?
A. New Shares = Original Shares Owned x (New Ratio/Old Ratio)
B. 75 shares x (7/5) - INVERSE
C. New Shares = 105 Shares

Calculate New Share Price?
A. New Share Price = Original Share Price x (Old Ratio/New Ratio)
B. $39.75 x (5/7) - ORIGINAL
C. ≈ $28.39 rounded to the penny

Question 12

Calculate:
Original Shares Owned: 105
Original Share Price: $104.55

8:3

What type of Stock Split is this?
What is the New Number of Shares Owned?
What is the New Number of Share Price?

Answer 12

This is a Forward Stock Split

Calculate New Shares Owned?
A. New Shares = Original Shares Owned x (New Ratio/Old Ratio)
B. 105 shares x (8/3) - ORIGINAL
C. New Shares = 280 Shares

Calculate New Share Price?
A. New Share Price = Original Share Price x (Old Ratio/New Ratio)
B. $104.55 x (3/8) - INVERSE
C. ≈ $39.20625 rounded to the penny