HyunJi purchased 3000 shares of a company's stock for $7 per share. Her purchase represents a 10% ownership in the firm. The shares have increased in value to today's market value of $23 per share. Assume the company goes bankrupt and owes $870000 more in debts than the firm can pay after liquidating all of its assets. What is the maximum loss per share HyunJi will incur on this investment
HyunJi purchased 3000 shares of a company's stock for $7 per share. Her purchase represents a 10% ownership in the firm. The shares have increased in value to today's market value of $23 per share. Assume the company goes bankrupt and owes $870000 more in debts than the firm can pay after liquidating all of its assets. What is the maximum loss per share HyunJi will incur on this investment
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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HyunJi purchased 3000 shares of a company's stock for $7 per share. Her purchase represents a 10% ownership in the firm. The shares have increased in value to today's market value of $23 per share. Assume the company goes bankrupt and owes $870000 more in debts than the firm can pay after liquidating all of its assets. What is the maximum loss per share HyunJi will incur on this investment?
Multiple choice
$7 per share
$15 per share, computed as ($7 +23) / 2
$0 per share
$29 per share, computed as (10% x $870000) / 3000 shares
$23 per share
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