When General Mills, Inc., the cereal company, rose from about $55 per share to above $70 per share on improved earnings in 2010, the company announced a 2-for-1 stock split. What is a stock split, and what effect does it have on the company’s stockholders’ equity?
What effect will it likely have on the market value of the company’s stock? In light of your answers, do you think the stock split is positive for the company and for its stockholders?