General Securities Sales Supervisor (Series10) Practice Exam

After a stock split, what confirmation does a customer buying shares just before the payable date receive?

1. A 100 shares at $30

2. B 300 shares at $10

3. C A due bill for an additional 200 shares

4. D No due bill for an additional 200 shares

The correct answer is: A 100 shares at $30

When a stock split occurs, the existing shares are divided into a specified number of new shares, which increases the total number of shares outstanding while reducing the price per share proportionately. In this scenario, the customer buying shares just before the payable date will receive a confirmation reflecting the new number of shares they own, along with the adjusted price per share. In this case, if the stock underwent a split that increased the number of shares from 100 to 300, and the price adjusted accordingly, the customer would indeed receive confirmation of owning 300 shares at the new split-adjusted price of $10 each. This accurately reflects the changes made during the split while ensuring the customer's overall investment remains unchanged in value. A due bill is typically issued when a purchaser buys stock before the record date and the payment of a dividend or stock split occurs after the purchase. Since the customer has already made the purchase prior to the payable date, they would receive the adjusted shares without needing a due bill for any additional shares, as they are now considered the holder of the new share allocation. This understanding clarifies that while options may present different figures regarding shares and prices, it is crucial to match the specifics of a stock situation concerning splits with the knowledge of how ownership and