Question Details

What is the stock's expected price following the split 



 .	Ross Financial has suffered losses in recent years, and its stock currently sells for only $0.50 per share.  Management wants to use a reverse split to get the price up to a more "reasonable" level, which it thinks is $25 per share.  How many of the old shares must be given up for one new share to achieve the $25 price, assuming this transaction has no effect on total market value?
								
	a.	47.50						
	b.	49.88						
	c.	50.00						
	d.	52.50						
	e.	55.13						
								

 .	Keys Financial has done extremely well in recent years, and its stock now sells for $175 per share.  Management wants to get the price down to a more typical level, which it thinks is $25 per share.  What stock split would be required to get to this price, assuming the transaction has no effect on the total market value?  Put another way, how many new shares should be given per one old share?
								
	a.	6.65						
	b.	6.98						
	c.	7.00						
	d.	7.35						
	e.	7.72						
								

 .	Whited Products recently completed a 4-for-1 stock split.  Prior to the split, its stock sold for $120 per share.  If the firm's total market value increased by 5% as a result of increased liquidity caused by the split, what was the stock price following the split?
								
	a.	$28.43						
	b.	$29.93						
	c.	$31.50						
	d.	$33.08						
	e.	$34.73						
								

 .	Sheehan Corp. is forecasting an EPS of $3.00 for the coming year on its 500,000 outstanding shares of stock.  Its capital budget is forecasted at $800,000, and it is committed to maintaining a $2.00 dividend per share.  It finances with debt and common equity, but it wants to avoid issuing any new common stock during the coming year.  Given these constraints, what percentage of the capital budget must be financed with debt?
								
	a.	30.54%						
	b.	32.15%						
	c.	33.84%						
	d.	35.63%						
	e.	37.50%						
								

 .	Grullon Co. is considering a 7-for-3 stock split.  The current stock price is $75.00 per share, and the firm believes that its total market value would increase by 5% as a result of the improved liquidity that it thinks would follow the split.  What is the stock's expected price following the split?
								
	a.	$32.06						
	b.	$33.75						
	c.	$35.44						
	d.	$37.21						
	e.	$39.07						



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