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A firm's shares currently sell for $3.50 with 4 million shares outstanding. The firm plans to reverse split its stock by combining two shares into
A firm's shares currently sell for $3.50 with 4 million shares outstanding. The firm plans to reverse split its stock by combining two shares into one share. If the price after this reverse split is $6.52 have shareholders gained or lost value? How much value is gained or lost? (hint consider shareholder value to be market capitalization, which equals the number of shares outstanding multiplied by the stock share.)
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