Taylor's Stock Has Plummeted in Value and Is Currently Priced

question 9

Multiple Choice

Taylor's stock has plummeted in value and is currently priced at $5 a share.The firm prefers the price exceed $10 a share and thus has decided to do a reverse stock split.However, when it does this, the firm wants the stock price increased to at least twice its preferred minimum as it is concerned the price will fall further.Which one of the following stock split ratios is most appropriate for this situation?

• A)1-for-3
• B)1-for-4
• C)2-for-7
• D)4-for-1
• E)7-for-2

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Definitions:

Demand Curve

A graph demonstrating the relationship between the price of a good or service and the quantity demanded for it at those prices, typically showing a downward slope from left to right.

Demand Schedule

A table that shows the quantity of a good or service that consumers are willing and able to purchase at different price levels.

Marginal Cost

The elevation in full costs that come from generating an additional unit of a good or service.

Average Cost

The total cost divided by the number of goods produced, representing the per unit cost of production.