On January 1,Year 1 you bought 100 shares of Cyberdyne Systems Inc.It is now January 1 of Year 2.You have recorded stock price and dividend information for Cyberdyne in the table,below.You want to calculate your return on the investment.After digging through your records you realize that Cyberdyne executed a 2-for-1 stock split late in Year 1.Use this information to adjust the data in the table and calculate the split-adjusted annual return on the investment in Cyberdyne shares.
Selected Financial Data
Cyberdyne Systems Inc.

Question

Quizplus · Accepted Answer

The price after a split is given by: P_A = 11ea7fdb_fc57_5b42_a768_2199f808a9cc_TB2902_11 Where P_B = the price before S = the split ratio In this example, S = 2 (a 2-for-1 split), so we can adjust the stock price in Year 2 and the dividend to see what they would have been had the split not happened. P₂ = $8 × 2 = $16 The dividends were also affected by the split. They were cut in half. Thus, without the split the dividend would have been: D₂ = $0.40 × 2 = $0.80 The split-adjusted return with dividends is: k₁ = 11ea7fdb_fc57_8253_a768_7ffbb5466068_TB2902_11 = 0.4 or 40%

On January 1,Year 1 You Bought 100 Shares of Cyberdyne