Which of the following statements is not true about a 2-for-1 stock split?

A. Par value per share is reduced to half of what it was before the split.

B. The market value of the stock will probably decrease.

C. Total paid-in capital increases.

D. A stockholder with 5 shares before the split owns 10 shares after the split.

Option c. Total paid-in capital increases are the correct answer. The stock's market value might decrease a true statement because of the times two issued shares had been reduced par value that affects its price.

The board of directors is the one to decide on stock splits. One of the reasons is to increase the corporation's issued and outstanding shares.

During the stock split, the total paid-in capital is not affected because the total is still the same before and after.

Option A. Par value decreases is a true statement. For example, before the stock split, the issued shares were 10,000, and the par value was $5, so the total is $50,000. After a 2-for-1 stock split, the issued shares become 20,000 (10,000 x 2), so the par value is = $50,000 / 20,000 = $2.50 per share, which is half of the original $5.

Option B. The stock's market value might decrease a true statement because of the times two issued shares had been reduced par value that affects its price.

Option D.5 shares become ten shares is a true statement because a 2-for-1 means one share will become two. So, five shares will become ten shares (5 x 2).

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