Common Stock
An investor owns 400 shares of ABC stock at $75 per share. The company declares a 3-for-1 stock split. After the split, the investor has:
In a 3-for-1 split, shares triple and price is divided by 3. The investor receives 400 x 3 = 1,200 shares. The price adjusts to $75 / 3 = $25. Total value remains $30,000 (400 x $75 = 1,200 x $25).
Complete Analysis & Legal Rationale
In a 3-for-1 split, shares triple and price is divided by 3. The investor receives 400 x 3 = 1,200 shares. The price adjusts to $75 / 3 = $25. Total value remains $30,000 (400 x $75 = 1,200 x $25).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing securities rule described in the explanation.
Does not match the governing securities rule described in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing securities rule described in the explanation.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.