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Delta Products Has Decided to Spin Off One of Its

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Delta Products has decided to spin off one of its subsidiaries,Gamma Technologies.Each Delta shareholder will receive 0.125 shares of Gamma for each share of Delta they own.Delta's price is $35.00 cum-dividend and immediately after the spin-off Gamma Technologies was trading for $24.00 per share.In a perfect capital market,what would Delta Product's ex-dividend share price be after this transaction?


Definitions:

Profit Maximizes

The process or strategy of adjusting the production output and pricing to achieve the highest possible profit.

Monopolistic Competition

This is a market structure in which many companies sell products that are similar but not identical, allowing for competition on aspects other than just price.

Marginal Revenue

Revenue gained by selling an additional unit, illustrating the increase in total revenue due to one more unit of output sold.

Innovation

The process of creating new products, services, or methods that improve efficiency or effectiveness.

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