Question: 1. Verizon Wireless has just announced a 2-for-1 stock split, effective immediately. Prior to the split, Verizon Wireless had a market value of $10 billion

1. Verizon Wireless has just announced a 2-for-1 stock split, effective immediately. Prior

to the split, Verizon Wireless had a market value of $10 billion with 200 million shares

outstanding.

a) Assuming that the split conveys no new information about the company, what is the

value of the company, the number of shares outstanding, and price per share after the

split?

b) If the actual market price immediately following the split is $34.00 per share, what does

this tell us about market efficiency?

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