Ross-Jordan Financial has suffered losses in recent years,and its stock currently sells for only $0.70 per share.Management wants to use a reverse split to get the price up to a more "reasonable" level,which it thinks is $21 per share.How many of the old shares must be given up for one new share to achieve the $21 price,assuming this transaction has no effect on total market value?

Question

Quizplus · Accepted Answer

To achieve a new share price of $21 from the current price of $0.70, divide the target price by the current price: $21 / $0.70 = 30. This means 30 old shares must be given up for one new share to reach the desired price.

Ross-Jordan Financial Has Suffered Losses in Recent Years,and Its Stock