Stansfield, Inc. currently has 400,000 shares of stock outstanding, each with a

Question

Stansfield, Inc. currently has 400,000 shares of stock outstanding, each with a market prrice of $20 and a par value of $2. The firm would prefer to have its stock trade at a value of between $30 and $35 per share. Of the following choices, which would allow the firm to achieve its objective? Explain your answer please.

A) The firm should execute a 2-for-1 stock split
B) The firm should execute a 50% stock dividend
C) The firm should execute a 1-for-2 reverse stock split
D) The firm should execute a 2-for-3 reverse stock split
E) The firm should pay a $2 per share cash dividend

Explanation / Answer

C) The firm should execute a 1 for 2 severse stock split -this is the option the firm to achive the object of the price of the firm reach in between 35 and 40

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