Effect of Stock Dividends on Stock Price
Inland Co., has a total of 40,000 shares of common stock outstanding and no preferred stock. Total stockholders’ equity at the end of the current year amounts to $2.5 million and the market value of the stock is $33 per share. At year-end, the company declares a 10 percent stock dividend—one share for each 10 shares held. If all parties concerned clearly recognize the nature of the stock dividend, what should you expect the market price per share of the common stock to be on the ex-dividend date?
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