Art purchased 2,500 shares of Delta stock. His purchase represents 10 percent ownership in the firm. His shares have increased i

Question

3 years ago

11

Art purchased 2,500 shares of Delta stock. His purchase represents 10 percent ownership in the firm. His shares have increased i

n value from the $12 a share he originally paid to today's market value of $13 a share. Assume Delta goes bankrupt and owes $450,000 more in debts than the firm can pay after liquidating all of its assets. What is the maximum loss per share Art will incur on this investment

Business

1 answer:

Pie · Answer 1 · 2022-02-16T06:33:43+03:00

Answer: $12

Explanation:

From the question, we are informed that Art purchased 2,500 shares of Delta stock and his purchase represents 10 percent ownership in the firm. We are further told that his shares have increased in value from the $12 a share he originally paid to today's market value of $13 a share.

Assume Delta goes bankrupt and owes $450,000 more in debts than the firm can pay after liquidating all of its assets, the maximum loss per share Art will incur on this investment will be the purchase price per share which was given in the question as $12.

This is because when a firm guess bankrupt, the maximum loss which will be incurred by Art will be the value of his investment which is $12.