XYZ CorpHas 1,000 Shares Outstanding and Retained Earnings of $25,000

question 108

Multiple Choice

XYZ Corp.has 1,000 shares outstanding and retained earnings of $25,000.Theoretically, what would you expect to happen to the price of their stock, currently selling for $30 per share, if a 25% stock dividend is declared?

• A)price should increase to $44.00 per share.
• B)price should increase to $37.50 per share.
• C)price should decrease to $24.00 per share.
• D)nothing; price should remain at $30.00.

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Definitions:

Mesoderm

The primary germ layer that gives rise to connective tissue and some epithelial tissue.

Endoderm

The primary germ layer that gives rise to epithelial tissues only.

Morula

A zygote that has undergone cleavage and results in a ball of cells.

Blastocyst

A morula that travels down the uterine tube to the uterus and is invaded with fluid. It then implants into the wall of the uterus.