Answer: number of shares increases to 400 and the exercise price is reduced to $28.75
Explanation:
4 for 1 stock split means 1 stock will be splitted into 4 equal stock. In this case, the 100 shares will become:
= 100 × 4
= 400 shares.
Then, the exercise price will be calculated as:
Exercise price:
$115 x 100 shares = new exercise price x 400 shares
$11500 = new exercise price x 400 shares
Exercise price = $11500/400
Exercise price = $28.75
Therefore, the number of shares increases to 400 and the exercise price is reduced to $28.75
