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Inga [223]
3 years ago
5

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 t

otal 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
Business
1 answer:
professor190 [17]3 years ago
5 0

Answer:

$31.50

Explanation:

Whited product recently concluded a 4-for-1 stock split

Before the split its stock was sold for $120 per share

The total market value is increased by 5%

The first step is to calculate the quantity of stock after the split

= $120/4

= 30

Since the total market value was increased by 5% then the stock price following the split can be calculated as follows

= 30×1.05

= $31.50

Hence the stock price following the split is $31.50

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Answer:

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Explanation:

Calculation for required return using this formula

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Using this formula

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Expected capital gains yield=4.5%

Therefore Expected capital gains yield is 4.5%

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