SIE (Securities Industry Essentials) Practice Exam

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After a 10% stock dividend, if a customer holds 500 shares at $40.00, what is the new number of shares and price?

550 shares at $36.36
500 shares at $44.00
550 shares at $40.00
600 shares at $36.36

The correct answer is: 550 shares at $36.36

After a 10% stock dividend, the customer will have an additional 10% of their current shares, resulting in a total of 550 shares. However, the price per share will decrease by the same percentage, resulting in a new price of $36.36 per share. Option B is incorrect because the number of shares does not change after a stock dividend, only the price per share does. Option C is incorrect because the new share price will decrease due to the stock dividend, not stay the same. Option D is incorrect because while the number of shares increases by 20%, the price per share decreases by 10%, resulting in a lower total price.