Shadows, Inc., had shares outstanding that were valued at $120 per share before a two-for-one stock split.

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Shadows, Inc., had shares outstanding that were valued at $120 per share before a two-for-one stock split. After the stock split, the shares were valued at $62 per share. If we accept that the firm’s financial maneuver did not create any new value, then why might the market value of the shares increase?

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Fundamentals of Corporate Finance

ISBN: 978-1119371403

4th edition

Authors: Robert Parrino, David S. Kidwell, Thomas Bates

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