Common Stock
An investor owns 100 shares at $50. After a 1-for-2 reverse split, the position will be:
Reverse split: fewer shares, higher price. Forward split: more shares, lower price. Total value unchanged.
Complete Analysis & Legal Rationale
In a 1-for-2 reverse split, shareholders receive 1 new share for every 2 old shares, reducing the number of shares by half. The price doubles to maintain the same total value: 100 shares becomes 50 shares, and $50 per share becomes $100 per share. Total value remains $5,000.
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 concept in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.