Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that you wnte a column for a very widely followed financial blog tited Finance Questions: Ask the Expert Your job is to feld readers'

image text in transcribed
Assume that you wnte a column for a very widely followed financial blog tited "Finance Questions: Ask the Expert" Your job is to feld readers' questions that deal with finance. This week you are going to address two questions from your readers that have to do with dividends. Question 1: I own 10 percent of the Standlee Corporation's 60,000 shares of common stock, which most recenty traded for a price of $9900 per share The company has since declared its plans to engage in a 2 -for-1 stock split. a. What will my financial position be after the stock split, compared to my cunent position? (Hint Assume the slock price tals proportionasely) b. The executive vico-president in charge of finance believes the price will not fat in proportion to the size of the split and wil only fal 45 percent because she thinks the pro-apit price is above the optimal price range. If she is corroct, what wil be my net gain from the spir? Question 2: I am on the board of drectors of the B, Philips Corporaton, and the company has announced its plan to pay dividends of $675,000. Presents, there are 270,000 ahares outstanding and the earnings per share is $6. it looks to me the the stock should sel for $41 after the ex-dividend date. If instead of paying a dividend, the managemient decides to repurchase stock a. What should be the repurchase price that is equivalent to the proposed dividend? (Hint lignore any tax effects) b. How many shares should the company repurchase? c. I want to look out for the small shareholdors. If someone owns 100 shares, do you think she would prefer that the compory pay the dividend or repurchase stock? 1. a. If the stock price falls proportionately, what wil my tnancial position be after the stock splc, compared to my current posbon? (Select the best choice below) A. There is an increase in the value of my poation in the comparyse thares 10. There is no change in the value of my position in the companys shares. c. There is not suflicient information to judge the change in the vatue of ny postion in the concarys shares. D. There is a decrease in the value of ny posfion in the companys shares. 1. b. If the stock proce wil only tal 45 percent what will be my not gan from the split? (Round to the nearest doliar)

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

Step: 3

blur-text-image

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 Markets And Institutions

Authors: Jeff Madura

6th Edition

0324162618, 978-0324162615

More Books

Students also viewed these Finance questions

Question

What are the purposes of strategic planning?

Answered: 1 week ago

Question

6. What qualifications are needed to perform the job?

Answered: 1 week ago