Questions / Quant research, Backtest integrity
A split changes shares, not wealth
A simulation owns 100 shares at $80. A 2-for-1 split occurs and the first post-split price is $41. With no dividend or trade, what is the position’s dollar profit?
Answer it in the app It's free. You get hints, a second try if you miss, and a follow-up question.
Show the answer and worked solution
Answer: 200 USD
- After the split the position contains 200 shares worth $8,200. Its starting value was $8,000, so profit is $200.
Interview shortcut. Splits change shares, not value: 200 × 41 − 100 × 80.
In the app this has a follow-up where one thing about the setup changes. Try the follow-up.