Question: A firm s shares currently sell for 3 50 with 4 million
A firm’s shares currently sell for $3.50 with 4 million shares outstanding. The firm plans to reverse split its stock by combining two shares into one share. If the price after this reverse split is $6.52, have shareholders gained or lost value? How much value is gained or lost? ( Consider shareholder value to be the market capitalization, which equals the number of shares outstanding multiplied by the stock price.)
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