Able, Baker, and Charlie are the only three stocks in an index. The stocks sell

Question

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $96, $315, and $114, respectively. If Able undergoes a 2-for-3 reverse stock split, what is the new divisor? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $96, $315, and $114, respectively. If Able undergoes a 2-for-3 reverse stock split, what is the new divisor? (Do not round intermediate calculations. Round your answer to 5 decimal places.)

Explanation / Answer

Answer:

Able : $ 96

Baker : $ 315

Charlie : $ 114

There are still only 3 price in index. It's just that the new price of Baker is $ 96/2 = $ 48.

Old index : ( $ 96 + $ 315 + $ 120 ) / 3 = 531 / 3 = $ 177

New Index : ( $ 48 + $ 315 + 120 ) / 3 = $ 161

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