Question
Consider an exchange-traded put option to sell 200 shares for $60 per share (strike price) for company ABC. Suppose the company ABC announces a 3
Consider an exchange-traded put option to sell 200 shares for $60 per share (strike price) for company ABC. Suppose the company ABC announces a 3 for 2 stock split, answer the following questions.
(a) What is the new strike price after the stock split ?
(b) What is the number of shares that can be sold after the stock split ?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To determine the new strike price and the number of shares that can be sold after the stock split well first understand the impact of a 3 for 2 stock split A 3 for 2 stock split means that for every 2 shares of company ABC owned before the split the shareholder will receive an additional 1 share Essentially the total number of shares increases by 50 a To find the new strike price after the stock split we ...
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Step: 2
Step: 3
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Advanced Financial Accounting
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
10th edition
78025621, 978-0078025624
