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Outstanding shares are the total number of a company's shares that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares. This count reflects both the shares available on the open market and those kept by insiders or held under agreements.
In the exercise regarding Willis & Company's stock split, before the split, there are 20 million shares outstanding. Understanding the total outstanding shares is vital for accurately determining aspects like earnings per share (EPS) and calculating dilution impact post any corporate actions, such as stock splits.
The stock split causes a direct increase in the number of outstanding shares, changing from 20 million to 80 million due to the 4-for-1 split, which quadruples this count while keeping the total value of shares unchanged.

Par value is a nominal or face value given to the stock as stated in the corporate charter. It is the legal capital per share and usually represents a minimum price that shares will not sell below on the market. While par value has little bearing on the stock's market value, it plays a role in accounting evaluations and legal requirements.
Before the stock split, each of Willis & Company's shares has a par value of $1. The 4-for-1 stock split results in an increase in the number of shares, thus requiring an adjustment in par value to maintain the total par value constant across all shares.
With 80 million shares now outstanding, the new par value is recalculated to $0.25 per share. This change ensures that the par value remains legally accounted for without affecting the company’s equity.

Common stock represents equity ownership in a corporation and entitles holders to vote at shareholders’ meetings and receive dividends. Common stock generally carries one vote per share, aligning the interests of shareholders in corporate governance.
For Willis & Company, the common stock is experiencing a stock split, which only impacts the number of shares and the par value but not the fundamental ownership rights those shares confer. Shareholders now have four shares for every one share they previously owned.
This adjustment is strategic, allowing the company to make their shares more affordable without altering the intrinsic value or terms of the common stock itself, which can also potentially attract a broader range of investors.

A market price adjustment occurs when a company undergoes stock splits, affecting how the shares are priced in the market. The aim is to make shares more appealing by decreasing the price per share while retaining the same total market capitalization.
Willis & Company’s decision for a 4-for-1 stock split means that the market price will adjust downwards. Initially, shares are valued at $100 each. Post-split, with the total number of shares quadrupled, the per-share price is expected to drop to $25 while maintaining the overall market value.
This adjustment is beneficial to both existing and potential shareholders as it increases liquidity and access to buying shares, making the company more attractive to various investors and potentially increasing market participation.