Question
10-54 Meaning of Stock Splits and Dividends A January 31 announcement to shareholders of Premier Financial, a California savings and loan company, stated that the
10-54 Meaning of Stock Splits and Dividends
A January 31 announcement to shareholders of Premier Financial, a California savings and loan
company, stated that the company had "good news" for stockholders. The announcement went
on to explain that the board raised the quarterly cash dividend 12% and then declared a five-forfour
stock split in the form of a 25% stock dividend. The additional shares were to be distributed
on March 15 to shareholders of record on February 15.
On March 16, the board approved a merger between Premier Financial and a large U.S. steel
company. The agreement called for a cash payment of $33.60 on each outstanding United Financial
share. The original 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.
What would be a good letter to the chairman indicating the reasons for your displeasure.
2. how would someone respond to the unhappy shareholder in requirement 1.
3. A shareholder of Premier 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,
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started