Question
(a) Toombs Media Corp. recently completed a 1-for-25 reverse stock split. Prior to the reverse split, its stock sold for $2 per share. The firm's
(a) Toombs Media Corp. recently completed a 1-for-25 reverse stock split. Prior to the reverse split, its stock sold for $2 per share. The firm's total market value is anticipated to decline by 10% after the reverse split. Other things held constant, what is the best estimate of the stock price right after this reverse split? (1 point)
(b) Wholesale Products recently completed a 5-for-1 stock split. Prior to the split, its stock sold for $1,600 per share. If the firm's total market value increased by 15% as a result of increased liquidity caused by the split, what was the stock price following the stock split? (1 point)
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