The Directors of Hager Mills Prefer to Keep the Price

question 210

Multiple Choice

The directors of Hager Mills prefer to keep the price of the firm's stock within a price range of $30 to $45 a share. Currently, the stock is selling for $63 a share due to the improving growth outlook of
The firm. Given this, the directors are most apt to:

• A) Pay a special dividend.
• B) Implement a stock repurchase program.
• C) Declare a 2-for-1 stock split.
• D) Declare a 1-for-2 reverse stock split.
• E) Pay a liquidating dividend.

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Definitions:

MUb/Pb

A concept from economics that compares the additional utility gained from consuming one more unit of a good (MUb) to its price (Pb), often used in optimal consumption analysis.

Maximizing Utility

The economic principle that individuals seek to achieve the highest level of satisfaction possible from their consumption of goods and services, given their income and the prices of those goods and services.

Marginal Rate

The rate at which one variable changes with respect to a minute increase in another variable, often used in the context of marginal tax rates or marginal rates of substitution in economics.

Market Basket A

A selected set of goods and services used to monitor changes in price levels over time, often for the purpose of calculating inflation.