Meaning of Stock Splits A letter of January 31 to shareholders of United Financial, a California savings and loan company, said: Once again, I want to take the opportunity of sending you some good news about recent developments at United Financial. Last week the board raised United's quar- terly cash dividend 12 percent and then declared a 5-for-4 stock split in the form of a 25 percent stock dividend. The additional shares will be distributed on March 15 to shareholders of record February 15. On March 16, the board approved a merger between National Steel Corporation and United Financial. The agreement called for a cash payment of $33.60 on each outstanding United Financial share. The original National Steel offer (in early February) was $42 per share for the 5.8 million shares outstanding. 1. As a recipient of the letter of January 31, you were annoyed by the five-for-four stock split. Prepare a letter to the chairman indicating the reasons for your displeasure. 2. Prepare a response to the unhappy shareholder in requirement 1. 3. A shareholder of United Financial wrote to the chairman in early March: "I'm confused about the change in the agreed upon price per share. I owned 100 shares and thought I'd receive $4,200. Now the price has dropped from $42.00 to $33.60." Prepare a response to the shareholder.