$15.00 PERFECT A+ POINT TO POINT SOLUTION
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- Posted on Jan 23, 2009 at 6:18:45PM
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Preview: ... ividend policy of a firm. In other words, issuing new shares on a pro rata basis or distribution of shares free of cost to the current/existing shareholders, while the firm’s assets, its earning, the risk being assumed and the investors percentage ownership in the company remain unchanged. Issuing shares increases the number of outstanding shares of the company. The effect of the stock dividend on the market price per share calculation is that it will fall proportionately to the number of shares issued (Glossary, 2008). <br><br>Stock splits: Stock split is a method commonly used to lower the market price of the shares by increasing the number of shares belonging to each shareholder. With the share split, the balance of the equity accounts does not change, but the par value per share changes. The earning per share will be diluted and the market price per share will fall proportionately with a share split. But the total value of the holdings of shareholders remains unaffected with a share splits. <br><br>Reverse Split: It is the situation when company’s stock is trading at a low price; the company may want to reduce the number of existing shares to prop up the market price per share. The reduction of the number of outstanding shares by increasing per share par value is known as reverse split. The reverse split is used to stop the market price per share below certain level. The reverse split is generally an indication of financial difficulty and is therefore, intended to in ...
The full tutorial is about 1158 words long .
$7.00 perfect solution
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- Posted on Jan 25, 2009 at 6:34:03PM
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Preview: ... iquidity: Trading and liquidity is the main reasons to provide stock dividend or lower the price of the stock (Stock Dividend, 2008). <br><br>· Retain: The second vital reason is to provide stock dividend to retain the existing shareholders and attract the potential investors towards the company. <br><br>· Market Image: A desire to build a strong image in the market place or want to increase trading is another crucial reason for the stock dividend. It also builds the strong image in the eyes of the potential and prospective investors. <br><br>Reasons for Stock splits: <br><br>· Shares attractive: the main purpose of a stock split is to reduce the market price of the share in order to make it more attractive to investors and placed the shares in more popular trading range. <br><br>· Possibility of higher profit in the future: Share splits are used by the management to communicate or indicate to the investors that company is expected to earn profit in future. <br><br>· Higher dividend: Another most important reason of the share splits is to increase the total dividends of shareholders (Bizavings, 2008). <br><br>Reasons for the Reverse splits: <br><br>· The foremost reason of reverse splits is to uphold the required listing requirements on a stock exchange, so that company will be able to keep off free from the condition of delisted. <br><br>The various tools which are used to increase the liquidity of a common stock are stock dividends and stock splits. These tools are used to bring down cos ...
The full tutorial is about 1107 words long .
