Posted by: ifiwasu November 4, 2008
finance questions
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a)

You own 100 shares of Troll Brothers’ stock, which currently sells for $120 a share.  The company is contemplating a 2-for-1 stock split.  Which of the following best describes what your position will be after such a split takes place? 

  1. You will have 200 shares of stock, and the stock will trade at or near $120 a share.
  2. You will have 200 shares of stock, and the stock will trade at or near $60 a share.
  3. You will have 100 shares of stock, and the stock will trade at or near $60 a share.
  4. You will have 50 shares of stock, and the stock will trade at or near $120 a share.

b)

Based on the information below, what is Ezzel Enterprises' optimal capital structure? 

  1. Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50.
  2. Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90.
  3. Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20.
  4. Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40.

    Interesting questions.....enjoy answering them....
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