I own 8 percent of the Standlee Corporations 30,000 shares of common

stock, which most recently traded for a price of $98 per share. The company has since

declared its plans to engage in a 2-for-1 stock split.

a)What will my financial position be after the stock split, compared to my current

position? (Hint: Assume the stock price falls proportionately.)

b)The executive vice-president in charge of finance believes the price will not

fall in proportion to the size of the split and will only fall 45 percent because

she thinks the pre-split price is above the optimal price range. If she is correct,

what will be my net gain from the split?