A Company Whose Shares Are Currently Trading at $3

question 79

Multiple Choice

A company whose shares are currently trading at $3.60 proposes to have a 25% split; that is,four new shares for one existing share.At the commencement of the next business day,a dividend of 25 cents is paid on existing shares,followed immediately by the share split.What is the theoretical price of the new shares?

• A) $0.72
• B) $0.90
• C) $2.70
• D) $3.35

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Definitions:

Personality Development

The process by which an individual's personality grows and evolves over time, influenced by a combination of genetic, environmental, and social factors.

Objective Methods

Research or assessment techniques that aim to minimize bias and subjectivity, providing measurable and observable data.

Rational Self-Control

The ability to regulate one's emotions, thoughts, and behaviors in a way that is consistent with long-term goals and societal norms.

Libido

A term used in psychoanalytic theory to describe the energy created by sexual instincts and desire.