Question
Imperial Energy drink franchise Vaderade, Inc. has received a lot of complaints from customers and its stock price is now only 5 ICs per share
Imperial Energy drink franchise Vaderade, Inc. has received a lot of complaints from customers and its stock price is now only 5 ICs per share (currency in Imperial Credits). The company employs a one-for-five reverse stock split to increase the stock value. Assume Ms. Mothma owns 180 shares. a. How many shares will she own after the reverse stock-split? b. What is the anticipated price of the stock after the reverse stock split? c. Investors usually have a negative reaction to a reverse stock split. Assume the stock only goes up to 80% of the value in (b). What will be the stocks price be? d. How has the value of Ms. Mothmas holdings changed from before the reverse stock split to after the reverse stock split? [based on the value computed in (c)]
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