Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

Financial Management Principles And Practice

Authors: Timothy Gallagher

6th Edition

1930789157, 978-1930789159

More Books

Students also viewed these Finance questions

Question

why we face Listening Challenges?

Answered: 1 week ago

Question

what is Listening in Context?

Answered: 1 week ago