The stock is split two for one and a $3 per share cash dividend is declared.
(a) what will be the new price of the stock?
(b) If the firm total earning do not change, what is the payout ration before and after the stock split?
2007-03-19 02:54:30 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
a.) 90/2 = $45
b.) before split = 6/9.50 = 63.16%
after split = 3/4.75 = 63.16%
2007-03-19 06:05:23 · answer #1 · answered by BosCFA 5 · 0⤊ 0⤋
The new price of the stock would be whatever the public would be willing to pay for it, but in general, when an expensive stock splits it is less expensive for small buyers to get, so there is increased buying that adds pressure upwards on share price. So it probably would trade a bit over $45
Payout ratio is the same as earnings don't change and there are twice as many shares and dividend would be 1/2 of presplit dividend.
$3 bonus doesn't effect anything as it comes from cash on hand.
2007-03-19 04:45:16 · answer #2 · answered by bob shark 7 · 0⤊ 0⤋
Yes. They went ex-div on 28/5. So if you sell on that day or after you sell without (Ex) the dividend, so it's yours. Pay date is 31/7
2016-03-16 22:54:57 · answer #3 · answered by Anonymous · 0⤊ 0⤋