Question

Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $2 per share. It is going to employ a one-for-five reverse stock split to increase the stock value. Assume Dean Smith owns 140 shares.

NUMBER OF SHARES _______________

a. How many shares will he own after the reverse stock split? (Do not round intermediate calculations and round your answer to the nearest whole number.)

b. What is the anticipated price of the stock after the reverse stock split? (Do not round intermediate calculations and round your answer to 2 decimal places.)

ANTICIPATED STOCK PRICE _____________

c. Because investors often have a negative reaction to a reverse stock split, assume the stock only goes up to 80 percent of the value computed in part b. What will the stock’s price be? (Do not round intermediate calculations and round your answer to 2 decimal places.)

STOCK PRICE ________

d. How has the total value of Dean Smith’s holdings changed from before the reverse stock split to after the reverse stock split (based on the stock value computed in part c)? To get the total value before and after the split, multiply the shares held times the stock price. (Input the amount as a positive value. Do not round intermediate calculations and round your answer to 2 decimal places.)

DEAN SMITH'S HOLDING INCREASED OR DECREASED BY _____________

Answer 1

if you have any doubt then comment below

Aus Post - split Shares - Pre-split Share Xsplit ratio 140 x - - 28 shares 0.6) Aus Post-split Stock Price = Pre-split Price x Years - 93 - 10 = $10.00 An adjusted Stock Price Adjustment ratio X Post -split Price Xe X/0 . = $be = $8.00 d) Pre-split value = Pre-split Shares & Pre-split Price 140 X $9 to Post-split value - Post-split Share & Post-split Price - 28 x $8 $294.00