Question
A company conducts the following capital payout and raising policies. Assume that there are no taxes, no signalling effects and no transaction costs. Which one
A company conducts the following capital payout and raising policies. Assume that there are no taxes, no signalling effects and no transaction costs. Which one of the following statements is NOT correct?
a. 1 for 5 rights issue at a subscription price of $1 when the pre-announcement stock price was $3, will increase the number of shares by 20% and decrease the share price by 11.11%.
b. 10% stock buy-back will decrease the number of shares by 10%.
c. Cash dividend is one capital payout policy.
d. 3 for 2 stock split will increase the number of shares by 50% and decrease the share price by 33.33%.
e. 1 for 2 bonus issue will increase the number of shares by 50% and decrease the share price by 50%.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored 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