Simmons Mineral Operations, Inc. (SMO), currently has 530,000 shares of stock outstanding that sell for $68 per
Question:
Simmons Mineral Operations, Inc. (SMO), currently has 530,000 shares of stock outstanding that sell for $68 per share. Assuming no market imperfections or tax effects exist, what will the share price be after:
a. SMO has a five-for-three stock split?
b. SMO has a 15 percent stock dividend?
c. SMO has a 42.5 percent stock dividend?
d. SMO has a four-for-seven reverse stock split?
e. Determine the new number of shares outstanding in parts (a) through (d).
Step by Step Answer:
To find the new stock price we multiply the current stock price by the ratio o...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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