DRK, Inc. currently has 400,000 shares of stock outstanding, with a market price of $20 and a book value of $2. The ﬁrm would prefer to have its stock trade at a value between $30 and $35 per
Share. Of the following choices, which would allow the ﬁrm to achieve its objective?

Question

Quizplus · Accepted Answer

A 2-for-3 reverse stock split would reduce the number of shares outstanding to 266,667 (400,000/3*2), and if the market price remains the same, the new value per share would be $30. Therefore, this option would allow the firm to achieve its objective of having its stock trade at a value between $30 and $35 per share. The other options do not directly address the price range issue and may not have a significant impact on the market price per share.

DRK, Inc Currently Has 400,000 Shares of Stock Outstanding, with a a Market