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:

Evaluation Apprehension

Concern that others are evaluating our behavior.

Social Pressure

The influence exerted by society or a group of people on an individual, encouraging conformity to certain behaviors, norms, or values.

Diffusion of Responsibility

A psychological phenomenon where people are less likely to take action or feel a sense of responsibility in the presence of a large group of people.