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Posted on 11-04-08 11:17 AM     Reply [Subscribe]
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a)

You own 100 shares of Troll Brothers’ stock, which currently sells for $120 a share.  The company is contemplating a 2-for-1 stock split.  Which of the following best describes what your position will be after such a split takes place? 

  1. You will have 200 shares of stock, and the stock will trade at or near $120 a share.
  2. You will have 200 shares of stock, and the stock will trade at or near $60 a share.
  3. You will have 100 shares of stock, and the stock will trade at or near $60 a share.
  4. You will have 50 shares of stock, and the stock will trade at or near $120 a share.

b)

Based on the information below, what is Ezzel Enterprises' optimal capital structure? 

  1. Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50.
  2. Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90.
  3. Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20.
  4. Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40.

    Interesting questions.....enjoy answering them....

 
Posted on 11-04-08 11:30 AM     Reply [Subscribe]
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I think the answer is b.You will have 200 shares of stock, and the stock will trade at or near $60 a share.

Please follow this explanation:

What is a 2-for-1 stock split?

A1. A 2-for-1 stock split means that a stockholder will have twice as many shares as they had before the stock split with each share valued at approximately half the pre-split market price.

Here’s an example: As of the Record Date (August 1, 2006) if a stockholder owns 100 shares of OXY and the market price was $100.00 per share, that stockholder’s total investment value is $10,000. After the stock split, the stockholder will have 200 shares of stock but the market price will be approximately $50.00 per share. The stockholder’s total investment value remains the same at $10,000 until the stock price moves up or down

 


 
Posted on 11-04-08 1:28 PM     Reply [Subscribe]
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neerman, why are you trying to help for such a simple question.... Let him do on his own...He sosent deserve a Degree if cannot do this simple shit..

ifiwasu, dont make sajha a mess with your homework....

 

NepaliThita


 


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