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3 years ago

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Suppose the stock of Host Hotels & Resorts is currently trading for per share. a. If Host issued a stock dividend, what wo

uld its new share price be? b. If Host does a 3:2 stock split, what would its new share price be?

1 answer:

gayaneshka [121]3 years ago

3 0

Answer:

A. $16.67 per share

B. $13.33 per share

C. $60.00 per share

Explanation:

a. Calculation to determine what will its new share price be If Host issued a 20% stock dividend

Using this formula

New share price (stock dividend) = Old price / (1 + Stock dividend rate)

Let plug in the formula

New share price (stock dividend) =$20/(1+0.20)

New share price (stock dividend) =$20/1.20

New share price(stock dividend) =$16.67 per share

Therefore If Host issued a stock dividend, its new share price will be $16.67 per share

b. Calculation to determine what will its new share price be If Host does a 3:2 stock split

Using this formula

New share price=Old price/Stock split

Let plug in the formula

New share price=$20/(3/2)

New share price=$20/1.5

New share price= $13.33 per share

Therefore If Host does a 3:2 stock split its new share price will be $13.33 per share

c. Calculation to determine what will its new share price be If Host does a 1:3 reverse split

Using this formula

New share price=Old price/Reverse split

Let plug in the formula

New share price=$20/(1/3)

New share price=$20/0.33333

New share price= $60.00 per share

Therefore If Host does a 1:3 reverse split its new share price will be $60.00 per share

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