In the previous problem, suppose the company instead decides on a five-for-one stock split. The firm’s 80-cent per share cash dividend on the new (post-split) shares represents an increase of 10 percent over last year’s dividend on the pre-split stock. What effect does this have on the equity accounts? What was last year’s dividend per share?
Answer to relevant QuestionsWhat is a call option? A put option? Under what circumstances might you want to buy each? Which one has greater potential profit? Why? What are the deltas of a call option and a put option with the following characteristics? What does the delta of the option tell you? Stock price = $47 Exercise price = $40 Risk-free rate = 6% per year, compounded ...Frostbite Thermalwear has a zero coupon bond issue outstanding with a face value of $25,000 that matures in one year. The current market value of the firm’s assets is $27,300. The standard deviation of the return on the ...The delta for a put option is N( d1 ) – 1. Is this the same thing as – N( –d1 )? Indicate the impact of the following corporate actions on cash, using the letter I for an increase, D for a decrease, or N when no change occurs. a. A dividend is paid with funds received from a sale of debt. b. Real estate ...
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