This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Oftentimes when a company's share price is very high it will choose to split the stock price and ... (Read 114 times)

Collmarie

  • Hero Member
  • *****
  • Posts: 569
on: Jun 29, 2018
Oftentimes when a company's share price is very high it will choose to split the stock price and offer each shareholder one share for each they currently hold. Explain why companies might do this and what the effect is on shareholder wealth.
 
  What will be an ideal response?

Question 2

Refer to Scenario 1 . The student has already taken 9 exams and scored a 80 on the 9th one. His average is a 70 after the 9th exam. If he scores a 70 on the tenth exam what will happen to his average?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

sabina576

  • Sr. Member
  • ****
  • Posts: 356
Reply #1 on: Jun 29, 2018
Answer to Question 1

Companies might do this if they believe that the high price of their stock is discouraging many investors from buying. The stock split does not have any impact on shareholder wealth because even though the price has fallen in half the number of shares each stockholder has in their possession has doubled. This leaves the net worth of their holdings in the company the same.

Answer to Question 2

His average after the 10th exam will remain unchanged at 70 . The reason is simple. Even though he scored lower than his previous exam score his score was equal to his average. This would have no impact on the average whatsoever.


Collmarie

  • Member
  • Posts: 569
Reply 2 on: Jun 29, 2018
:D TYSM

Dominic

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Did you know?

Alcohol acts as a diuretic. Eight ounces of water is needed to metabolize just 1 ounce of alcohol.

Did you know?

In the United States, an estimated 50 million unnecessary antibiotics are prescribed for viral respiratory infections.

Did you know?

Vampire bats have a natural anticoagulant in their saliva that permits continuous bleeding after they painlessly open a wound with their incisors. This capillary blood does not cause any significant blood loss to their victims.

Did you know?

According to animal studies, the typical American diet is damaging to the liver and may result in allergies, low energy, digestive problems, and a lack of ability to detoxify harmful substances.

Split thorn of a bullshorn acacia, revealing a nest of its ant mutualists. Split thorn of a bullshorn acacia, revealing a nest of its ant mutualists.
Effect of Perceived Price of a Drug on Placebo Analgesia Effect of Perceived Price of a Drug on Placebo Analgesia
How The Two-Party Presidential Vote is Split How The Two-Party Presidential Vote is Split
Overview of a computer-controlled high-pressure common rail V-8 diesel engine. Overview of a computer-controlled high-pressure common rail V-8 diesel engine.
Family interactive style predicts academic achievement in high school Family interactive style predicts academic achievement in high school
An organizational specialist is hired as a consultant to a company planning to open a coffee ... An organizational specialist is hired as a consultant to a company planning to open a coffee ...
Video: Antidiuretic hormone (vasoconstriction, water reabsorption & sweat inhibition)

For a complete list of videos, visit our video library