2. Assume that you bought 200 shares of FERRET Company stock for $75 each.

Since you bought it, the company has done the following things (in this order):

(1) split the stock 3-for-1

(2) distributed a 5% stock dividend

(3) paid a cash dividend of $1.50 per share

(4) reverse-split the stock 1-for-2 (reverse splits reduce the number of shares outstanding)

(5) paid a cash dividend of $3.25 per share

a. How many shares of FERRET Company stock will you have after all 5 events?

b. How many total dollars will you be paid in dividends over the course of the 5 events?

c. Assume that the market value of the stock after the 5 events is $80. If we determine your

investment's holding period return (HPR) as

(total $ value of shares held at end + all $dividends received - total amount paid for shares)/(total amount paid for shares),

what is your holding period return?

d. The expression for HPR in (c) is only approximate, because it doesn't account for the timing of the dividend payments.

Do you think the actual HPR would be higher or lower than the value you found in (c)? Explain briefly.