The directors of Hager Mills prefer to keep the price of the ﬁrm's stock within a price range of $30 to $45 a share. Currently, the stock is selling for $63 a share due to the improving growth outlook of
The ﬁrm. Given this, the directors are most apt to:

Question

Quizplus · Accepted Answer

By declaring a 2-for-1 stock split, the company can increase the number of shares outstanding and reduce the market price per share, allowing the stock price to fall within the desired range of $30 to $45. This action will not affect the value of the shareholders' investment but could increase the liquidity of the stock by making it more affordable for new investors. Paying a special dividend or implementing a stock repurchase program may temporarily boost shareholder returns but will not address the issue of the stock price being too high. A reverse stock split or liquidating dividend is not necessary or beneficial in this situation.

The Directors of Hager Mills Prefer to Keep the Price