Consider a firm with a stock price of $500 per share. The price exceeds the firms target price level, and it considers reducing the price per share.

(a) What is the new price per share, if the firm splits the stock five new for one old (S 5:1)?

(b) After bringing down the price level to $50 (somehow), the firm considers making a rights offer of one new shares for two old at a 50% discount (N 1:2 - 25). What is the resulting price without the right? 4

(c) The rights offer of the previous question (N 1:2 - 25) takes place in time near the payment of the next dividend of $5 per share. What is the new price per old share if the new shares are excluded from the dividend?