Coldwater Fishery is considering a 1-for-4 reverse stock split. Its stock is currently selling for $15 per

Question:

Coldwater Fishery is considering a 1-for-4 reverse stock split. Its stock is currently selling for $15 per share. Coldwater plans to pay a dividend equal to $0.48 per share after the split. But it would like to pay an equivalent dividend per share even if the split does not take place.

(a) What will the price of the stock be immediately after the stock split?

(b) What should the per share dividend be if Coldwater doesn’t split the stock?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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