((c) Explain the possible effects of cash dividends, stock dividends and stock splits on the financial ratios of a company. (d) Some firms use stock splits and stock dividends to keep stock prices within a perceived optimal trading range of RM20 to RM50. Briefly explain the optimal trading range hypothesis.

Question 2 (a) John is a shareholder of Carson Construction (Carson) and owns 100 shares of Carson. The board of directors of Carson recently announced a 20% stock dividend to all shareholders on record as at 30 Sept 2021. Assuming that Carson's current stock price is RM30 per share and there are 1,000,000 shares of stock in issue of RM1 par value, and its earnings per share (EPS) for last year was RM1.50. Required