a.
To calculate: The shares owned by Dean Smith after reverse stock split.
Introduction:
Reverse Stock Split:
A corporate procedure through which the management of a company consolidates its current shares to decrease the number of shares outstanding is termed as reverse stock split or stock merge.
b.
To calculate: The anticipated stock price post reverse stock split.
Introduction:
Reverse Stock Split:
A corporate procedure through which the management of a company consolidates its current shares to decrease the number of shares outstanding is termed as reverse stock split or stock merge.
c.
To calculate: The actual price of the stock on the basis of the assumption that stock would go up, but only up to 80% of the value computed in part (b).
Introduction:
Reverse Stock Split:
A corporate procedure through which the management of a company consolidates its current shares to decrease the number of shares outstanding is termed as reverse stock split or stock merge.
d.
To calculate: The change in the value of the holdings of Dean Smith from before the reverse stock split to after it.
Introduction:
Reverse Stock Split:
A corporate procedure through which the management of a company consolidates its current shares to decrease the number of shares outstanding is termed as reverse stock split or stock merge.
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Loose Leaf for Foundations of Financial Management Format: Loose-leaf
- Brinkley Resources stock has increased significantly over the last five years, selling now for $160 per share. Management feels this price is too high for the average investor and wants to get the price down to a more typical level, which it thinks is $25 per share. What stock split would be required to get to this price, assuming the transaction has no effect on the total market value? Put another way, how many new shares should be given per one old share? Select the correct answer. a. 7.25 b. 4.70 c. 5.55 d. 6.40 e. 3.85arrow_forwardPresently, your company’s Face Value of Equity Share RO 10 and Market Value of your Share in MSM is RO 25 per share. In order to increase the trading volume and market liquidity of your company stock, will you suggest the management to go for stock split? Explain your management about concept of stock slip with the advantage of splitting the stock of your company with the current scenario.arrow_forwardThe Big Container Company’s stock was trading by Rs. 90 per share, prior to the split. The company recently announced a 3-for-1 stock split. The split had no effect on the wealth of the company’s investors. What will be the new stock price?arrow_forward
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- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT