Oftentimes when a company's share price is very "high" it will choose to split the stock price and offer each shareholder one share for each they currently hold. Explain why companies might do this and what the effect is on shareholder wealth
What will be an ideal response?
Companies might do this if they believe that the "high" price of their stock is discouraging many investors from buying. The stock split does not have any impact on shareholder wealth because even though the price has fallen in half the number of shares each stockholder has in their possession has doubled. This leaves the net worth of their holdings in the company the same.
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Which of the following is the best example of a vertically integrated firm?
a. General Electric, which produces light bulbs, jet engines, washing machines, and so on b. Kinko's, which has a photocopy store near many colleges and universities c. USX Corporation, which owns ore and coal mines, coke ovens, blast furnaces, mills, and foundries d. Intel, which makes computer chips for most of the computer manufacturers e. Century 21, which has real estate offices that help people sell a house in one city and buy another house in another city
Contrary to the product market, in the currency market demand is positively sloped reflecting the greater speculative yield potential from high priced currencies
Indicate whether the statement is true or false