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Question
Assume that when you were in high school you saved to invest for your college education. You purchased 200 shares of Smiley Incorporated, a small but profitable company. Over the three years that you have owned the stock, the corporation's board of directors have taken the following actions:
- Declared a 2-for-1 stock split.
- Declared a 20 percent stock dividend.
- Declared a 3-for-1 stock split.
The current price of the stock is per share.
c. State your opinion as to whether or not you would have been better off if the board of directors had declared a cash dividend instead of the stock dividend and stock splits.
Solution
VerifiedAnswered 10 months ago
Answered 10 months ago
Step 1
1 of 5For this exercise, we are required to express our opinion as to whether or not shareholders are probably better off if cash dividends were declared instead of stock dividends.
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