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

question 41

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:

Noncontrolling Interest

refers to the portion of equity in a subsidiary not held by the parent company, often reflected as a separate component of equity in the consolidated financial statements.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Foreign Currency Transaction

A transaction that involves the exchange of currencies or the undertaking of financial obligations denominated in a currency other than the entity’s functional currency, requiring conversion and possibly leading to foreign exchange gains or losses.

Spot Rate

The current market price of a financial instrument or commodity available for immediate purchase and delivery.