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

If the current stock price of Ross Financial is $0.50 per share, and the desired price after the reverse split is $25 per share, then we need to perform a reverse split of 1:50 (25/0.5 = 50). This means that for every 50 old shares, we will create 1 new share. Therefore, the answer is C) 50.00.

Ross Financial Has Suffered Losses in Recent Years, and Its