Companies sometimes consider stock splits to bring down the price so that the st

Question

Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Consider the following case: Fortificate of Stoc, Mainway Toy Company currently has 10,000 shares of common stock outstanding. Its management believes that its current stock price of $90 per share is too high. The company is planning to conduct stock splits in the ratio of 3 for 1 as described in the animation. DO- If Mainway Toy Company declares a 3-for-1 stock split, what will be the price of the company's stock after the split, assuming that the total value of the firm's stock remains the same after the split, will be $30.00 | $30.00 $270.00 $360.00 $180.00 Fuzzy Muffin Manufacturing Company is one of Mainway's leading If the firm pays a 3 $45.00 bend, how

Explanation / Answer

It will be 96000 shares. As dividend to be paid is 3200000*3% ie 96000. Since dividend helps in controlling price. Issuing share stock of the same amount will help in controlling price of the share of the company.
Hence the company should issue stock dividend of 96000 shares to control the price as other option than stock split.

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