Business, 15.10.2020 14:01 Jeyson5852

Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Consider the following case:

Tolbotics Inc. currently has 15,000 shares of common stock outstanding. Its management believes that its current stock price of $90 per share is too high. The company is planning to conduct stock splits in the ratio of 3 for 1 as described in the animation.

If Tolbotics Inc. declares a 3-for-1 stock split, the price of the company’s stock after the split, assuming that the total value of the firm’s stock remains the same after the split, will be .

Hackworth Hardware Company is one of Robotics leading competitors. Hackworth Hardware Company’s market intelligence research team shares Robotics plans of announcing a stock split, influencing the distribution policy makers. Consequently, executives at Hackworth decide to offer stock dividends to its shareholders. A stock dividend is another way of keeping the stock price from going too high. Hackworth currently has 1,100,000 shares of common stock outstanding.

If the firm pays a 6% stock dividend, how many shares will the firm issue to its existing shareholders?

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