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?
A)24.50
B)25.00
C)50.00
D)52.50

Question

Quizplus · Accepted Answer

To achieve a price of $25 per share, the old shares must be combined in groups of 50 (since $0.50 multiplied by 50 equals $25). Therefore, a 1-for-50 reverse split is required, meaning that 50 old shares must be given up for 1 new share. The answer is choice C, 50.00.

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