SIE - Securities Industry Essentials Exam
An investor owns 600 shares of GHI common stock at $60 per share. GHI is conducting a 1 for 3 reverse stock split. The investor's position is now:
A reverse split decreases the number of outstanding shares. In this case it is a ratio of 1 to 3. The share price also increases by the same multiple. The correct answer is A. The net result is the same dollar amount when the number of shares is multiplied by the price per share - $36,000.