Finance 2

Chapter7 : Stock dividends , Stock Splits

a) Given below the partial balance sheet of Usahawan Bhd as at 31/12/2021 Par Value of stock RM8 Common Share RM2 million Paid-in Capital RM6 million Retained earnings RM22 million Total RM30 million The current market price of the common share is RM24.00. Show the effect on the company's capital position if: i) it declares 20% stock dividend (10 marks) ii) it declares a 4:1 stock split (6 marks) b) Define Systematic Risk and provide three (3) examples. (5 marks) c) Individual investors are faced with various constraints. Explain any two (2) of these constraints. (4 marks)