Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2 pts Question 31 Empirical research has shown that... O stock investors do not care what the price (per share) of a stock is because

image text in transcribed
2 pts Question 31 Empirical research has shown that... O stock investors do not care what the price (per share) of a stock is because (for example) whether each share increases from $20 to $21 in value, or from $2000 to $2100 in value, an investor will still earn the same return (5% in this case). O even though it shouldn't matter what the price (per share) of a stock is some companies will conduct stock splits or stock dividends so that the stock's price will land around a popular trading range such as $20-$80 per share. O stock investors would prefer their stocks trade at a higher (per share) price, all else equal (i.e., with an identical level of actual wealth involved) because this will provide greater capital gains tax savings in the event that the investor decides to sell his/her shares. even though it shouldn't matter what the price (per share) of a stock is some companies will conduct stock splits or stock dividends so that the stock's price will land around a popular trading range such as $150-$300 per share

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance With Excel

Authors: Simon Benninga

1st Edition

0195301501, 978-0195301502

More Books

Students also viewed these Finance questions