a.com/at/serviet/quiz?quiz actionatake Quiz&quiz.probGuid-QNAPCOA801010000004ebc
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a.com/at/serviet/quiz?quiz actionatake Quiz&quiz.probGuid-QNAPCOA801010000004ebc61000000;&ctxaream-00578ck; a Aa 4. Stock dividends and stock splits Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Consider the following case: Mainway Toy Company currently has 15,000 shares of common stock outstanding. Its management believes that its current stock price of $95 per share is too high. The company is planning to conduct stock splits in the ratio of 2 for 1 as described in the animation ertiicate of 12 1 If Mainway Toy Company declares a 2-for-1 stock split, the price of the company's stock after the split, assuming that the total value of the firm's stock remains the same after the split, will be If the firm pays a 6% stock dividend, how Scorecard Athletics Corp, is one of Mainway's leading competitors. Scorecard Athletics Corp.'s market intelligence research team shares Mainway's plans of announcing a stocik split, influencing the distribution policy makers. Consequently executives at Scorecard decide to offer stock dividends to its many shares wllth frm sue to its existing 0 114,000 shares O 108,300 shares O 125,400 shares O 96,900 shares A stock dividend is another way of keeping the stock price from going too high. Scorecard currentlhy has 1,900,000 shares of common stock outstanding. 8Explanation / Answer
a) The price after 2 for 1 split = 95/2 = $47.5
b) 6%*1,900,000 = 114,000 Shares
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