Question
In: Finance
Able, Baker, and Charlie are the only three stocks in an index.
Problem 5-9 Price-Weighted Divisor (LO4, CFA2)
Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $55, $312, and $92, respectively. If Able undergoes a 3-for-4 reverse stock split, what is the new divisor?(Do not round intermediate calculations. Round your answer to 5 decimal places.)
Divisor=?
Solutions
Expert Solution
The new divisor is computed as shown below:
= ($ 55 x 3 / 4 + $ 312 + $ 92) / [ ($ 55 + $ 312 + $ 92) / 3 ]
= $ 445.25 / $ 153
= 2.91013 Approximately
jeff jeffy answered 2 years agoRelated Solutions
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to restaurants and the general public. He has just begun his study
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Able Baker Charlie Company
Charles Maxwell is starting a cheesecake bakery, Able Baker
Charlie Company, to produce and sell different flavored cheesecakes
to restaurants and the general public. He has just begun his study
of accounting, and is a bit confused about the many types of
reports he has read about and how they will help him run his
business. He asks you to help him clarify what the differences
between managerial accounting and...
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Able Baker Charlie Company
Charles Maxwell is starting a cheesecake bakery, Able Baker
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to restaurants and the general public. He has just begun his study
of accounting, and is a bit confused about the many types of
reports he has read about and how they will help him run his
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