Yesterday at the market close, the stock of Kevin Spellman, Inc. was trading at $100 per share and there were 500,000 shares outstanding. This morning before the market opened, Kevin Spellman, Inc. announced that it was doing a 5:1 stock split. Under the efficient market hypothesis and with no new information, what will be the new stock price in dollars per share?

Yesterday at the market close, the stock of Kevin Spellman, Inc. was trading at $100 per share and there were 500,000 shares outstanding. This morning before the market opened, Kevin Spellman, Inc. announced that it was doing a 5:1 stock split. Under the efficient market hypothesis and with no new information, what will be the new stock price in dollars per share?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 9P

See similar textbooks

Similar questions

Yesterday, at the market close, the stock of Kevin Spellman, Inc. was trading at $200 per share, and there were 800,000 shares outstanding. This morning, Kevin Spellman, Inc. announced it was doing a 4:1 stock split before the market opened. Under the efficient market hypothesis and with no new information, what will be the new stock price in dollars per share?
Emergency Medical's stock trades at $100 a share. The company is contemplating a 3-for-2 stock split. Assuming that the stock split will have no effect on the market value of its equity, what will be the company's stock price following the stock split? Round your answer to the nearest cent. $
You believe that Rose, Inc., stock is going to fall and you have decided to sell 800 shares short. If the current share price is $47. The initial margin is 60%. A] Construct an equity balance sheet for the company. B] Repeat question a if stock price is $40 and the stock pricde is $55. C] What is your margin at each of this stock price?
A stock is currently selling for $30.00 a share. What is the gain or loss on the following transactions? Use a minus sign to enter the amount as a negative value. Round your answers to the nearest cent. You take a long position and the stock’s price declines to $16.85. $ You sell the stock short and the price declines to $16.85. $ You take a long position and the price rises to $43.65. $ You sell the stock short and the price rises to $43.65.
Recently, yoU sold 1200 shares of stock for $76750. The sale was a short sale with an initial margin requirement of 0.64. The maintenance margin is 0.32. The stock is currently trading at $27 a share WHAT IS YOUR EQUITY AFTER PRICE CHANGE WHAT IS THE ACTUAL MARGIN WHAT IS THE MARGIN CALL PRICE
The stock of Flop Industries is trading at $52. You feel the stock price will decline, so you short 450 shares at an initial margin of 70 percent. If the maintenance margin is 35 percent, at what share price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Margin call price
A company wants to raise $400 million in a new stock issue. Its investment banker indicates that the sale of new stock will require 5 percent underpricing and a 4 percent spread (Hint: the underpricing is 5 percent of the current stock price, and the spread is 4 percent of the issue price) a Assuming the company's stock price does not change from its current price of $65 per share, what would be the issue price to the public after underpricing? How many shares would the company need to sell? Note: Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places. Enter "Number of shares" answer in millions. 4 Issue price Number of shares million b. How much money will the investment banking syndicate earn on the sale? Note: Round intermediate calculations to 2 decimal places. Enter your answer in millions rounded to 2 decimal places. Investment bankers' revenue million i
Shell Inc. is having a stock split. The current price is $57 per share, and you own 500 shares. The split is a one-and-one-half-shares-for-one share split. What is the expected per share price after the split? What is your wealth before and after the split? Based on empirical evidence, does the market value of outstanding shares (new price times new quantity) tend to increase or decrease on average when stocks split into a greater number (but lower priced) shares, as in this case
The stock of PQR Industries is trading at $28.69. You feel the stock price will decline, so you short 219 shares at an initial margin of 61 percent. If the maintenance margin is 35 percent, at what share price (in $) will you receive a margin call?
The Stopperside Wardrobe Co. Just paid a dividend of $1.69 per share on Its stock. The dividends are expected to grow at a constant rate of 7.2% per year indefinitely. If Investors require an 12.2% return on The Stopperside Wardrobe Co. stock, answer the following: (Do not round Intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current price? Current price $ What will the price be in three years? Stock price in three years What will the price be in 15 years? Stock price in 15 years $
Ecolap Inc. (ECL) recently paid a $0.34 dividend. The dividend is expected to grow at a 12.50 percent rate. The current stock price is $42.52. What is the return shareholders are expecting? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
The price of the stock of Clarkson Corporation went from P50 to P56 last year. In the following year, the dividend was raised to P2.25. However, a bear market developed toward the end of the year, and the stock price declined from P56.00 at the beginning of the year to P48.00 at the end of the year. What is the rate of return (loss) to stockholders?