Neco Model Questions Vol1 2019 Commerce Question 50

Practice objective / multiple choice question 50 from the 2019 Neco Model Questions Vol1 Commerce examination.

Neco Model Questions Vol1 2019 Commerce Objective / Multiple Choice Hard Difficulty
Question 50 NECO_MODEL_QUESTIONS_VOL1 • 2019 • COMMERCE • objective

Company X has 5 million shares outstanding, each trading at \(\text{₦}1,800\). Its earnings per share (EPS) for the last fiscal year were \(\text{₦}120\). The company announces a 3‑for‑1 stock split, after which the share price adjusts perfectly. An investor who owned 100 shares before the split sells all his shares immediately after the split at the new market price, ignoring transaction costs. Calculate: a) the market capitalization before and after the split; b) the total proceeds the investor receives from the sale after the split; c) the price‑earnings (P/E) ratio before and after the split.

Answer Options

A. Market cap: ₦9 billion before and after; Proceeds: ₦180 000; P/E: 12 before and after
Correct Answer B. Market cap: ₦9 billion before and after; Proceeds: ₦180 000; P/E: 15 before and after
C. Market cap: ₦9 billion before and after; Proceeds: ₦200 000; P/E: 15 before and after
D. Market cap: ₦10 billion before and after; Proceeds: ₦180 000; P/E: 15 before and after
Correct Answer
B
Correct Option:
Market cap: ₦9 billion before and after; Proceeds: ₦180 000; P/E: 15 before and after

About This Question

This is Neco Model Questions Vol1 2019 Commerce Question 50. It is one of the objective questions from the 2019 Neco Model Questions Vol1 Commerce examination.

Difficulty level: Hard .

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