Question

A stock has a normal trading range of $22 to $30. The stock is currently selling at $141 a share. It would be common for a firm in this situation to: Select one: O a. Issue a one-time special dividend. O b. Repurchase outstanding shares by issuing debt securities. O c. Increase the number of outstanding shares via a stock split. d. Do a reverse stock split to lower the market price of the stock. e. Issue a liquidating dividend to lower the value of the firm.
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Normal range of the stock price of the stock is $ 22 to $ 30 but it is currently trading at $ 141. It means the shares price is High.

At high share price trading is not possible for all traders so best option is split the shares so it will increase the number of shares and trading of the same is also more.

Dividend paying is not a good option for this and reverse stock split can increase the share price so this option is also not correct.

So, Answer = Option C

Add a comment
Know the answer?
Add Answer to:
A stock has a normal trading range of $22 to $30. The stock is currently selling...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Zeltron is an all-equity firm with 130 million shares outstanding, which are currently trading for $11.57...

    Zeltron is an all-equity firm with 130 million shares outstanding, which are currently trading for $11.57 per share. A month ago, Zelatron announced it will change its capital structure by borrowing $211 million in short-term debt borrowing $244 million in long term debt and issuing $213 million of preferred stock. The 688 million raised by these issues plus another $23 million in cash that Zeltron already has, will be used to repurchase existing shares of stock. The transaction is scheduled...

  • Zetatron is an all-equity firm with 260 million shares outstanding, which are currently trading for 24.18...

    Zetatron is an all-equity firm with 260 million shares outstanding, which are currently trading for 24.18 per share. A month ago, Zetatron announced it with a change its capital structure by borrowing 943 million in short term debt, borrowing 1,036 million in long-term debt, and issuing 813 million of preferred stock. The 2,792 million raised by these issues, plus another 73 million in cash that Zetatron already has, will be used to repurchase existing shares of stock. The transaction is...

  • Zetatron is an all-equity firm with 210 million shares outstanding, which are currently trading for $11.86per share

    Zetatron is an all-equity firm with 210 million shares outstanding, which are currently trading for $11.86per share. A month ago, Zetatron announced it will change its capital structure by borrowing $324 million in short-term debt, borrowing $414 million in long-term debt, and issuing $458 million of preferred stock. The $1,196million raised by these issues, plus another $18 million in cash that Zetatron already has, will be used to repurchase existing shares of stock. The transaction is scheduled to occur today....

  • Suppose the stock of Jagdambay Exports Corporation is currently trading at $20 per share. Assume that...

    Suppose the stock of Jagdambay Exports Corporation is currently trading at $20 per share. Assume that there are 6000 shares outstanding. Please explain how each step is done. a)         If company issued a 20% stock dividend, what will its new price be? b)        If company does a 3:2 stock split, what will its new share price be? c)         If company does a 1:3 reverse split, what will its new share price be?

  • Zetatron is an​ all-equity firm with 300 million shares​ outstanding, which are currently trading for $10.91...

    Zetatron is an​ all-equity firm with 300 million shares​ outstanding, which are currently trading for $10.91 per share. A month​ ago, Zetatron announced it will change its capital structure by borrowing $650 million in​ short-term debt, borrowing $424 million in​ long-term debt, and issuing $642 million of preferred stock. The $1,716 million raised by these​ issues, plus another $75 million in cash that Zetatron already​ has, will be used to repurchase existing shares of stock. The transaction is scheduled to...

  • ​(Stock split)  Templeton Care​ Facilities, Inc. was contemplating a stock dividend. The​ firm's stock price had...

    ​(Stock split)  Templeton Care​ Facilities, Inc. was contemplating a stock dividend. The​ firm's stock price had risen over the last three years and was trading at ​$216 per share. The​ firm's board of directors felt that the trading range should be around ​$54 to ​$104, so they were initially considering a stock dividend​that, other things remaining the​ same, would result in a ​$54 share price. On second​ thought, the​ firm's board of directors decided to use a stock split rather...

  • Zetatron is an​ all-equity firm with 290million shares​ outstanding, which are currently trading for ​$9.45 per...

    Zetatron is an​ all-equity firm with 290million shares​ outstanding, which are currently trading for ​$9.45 per share. A month​ ago, Zetatron announced it will change its capital structure by borrowing $302 million in​ short-term debt, borrowing $ 291 million in​ long-term debt, and issuing $284 million of preferred stock. The ​$877 million raised by these​ issues, plus another $ 54 million in cash that Zetatron already​ has, will be used to repurchase existing shares of stock. The transaction is scheduled...

  • Luther is a successful logistical services firm that currently has $5 billion in cash. Luther has...

    Luther is a successful logistical services firm that currently has $5 billion in cash. Luther has decided to use this cash to repurchase shares from its investors and has already announced the stock repurchase plan. Currently Luther is an all equity firm with 1.25 billion shares outstanding. Luther's shares are currently trading at $20 per share. With perfect capital markets, what is the market value of Luther's equity after the share repurchase? O A. $15 billion OB. S5 billion O...

  • Question 2: A firm currently has 8 million shares of stock outstanding that have a current...

    Question 2: A firm currently has 8 million shares of stock outstanding that have a current market price of $12. If all else remains constant, what will be the share price after each of the following: A 20% stock dividend. A four-for-one stock split A 32.5% stock dividend What would be the total number of shares outstanding after parts a through c? a. b. d.

  • Luther is a successful logistical services firm that currently has S5 billion in cash. Luther has...

    Luther is a successful logistical services firm that currently has S5 billion in cash. Luther has decided to use this cash to repurchase shares from its investors and has already announced the stock repurchase plan Currently Luther is an all equity firm with 1.25 billion shares outstanding. Luther's shares are currently trading at $20 per share. With perfect capital markets, what is the market price per share of Luther's stock after the share repurchase? OA. $20 OB. $25 OC. $18...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT