Ross Financial has suffered losses in recent years, and its stock currently sells for only $0.50 per share. Management wants to use a reverse split to get the price up to a more "reasonable" level, which it thinks is $25 per share. How many of the old shares must be given up for one new share to achieve the $25 price, assuming this transaction has no effect on total market value?

Question

Quizplus · Accepted Answer

To achieve a $25 price per share from $0.50, each new share must represent 50 old shares (25 / 0.50 = 50).

Ross Financial Has Suffered Losses in Recent Years, and Its