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dattiger dattiger
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11 years ago
dividend. The stock currently sells for $100 per share. What will be the number of shares that I would hold and the total value of the wquity position after the dividend is paid?
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#1
11 years ago
In theory, nothing really changes in a stock split, in terms of valuation.  a 25% stock dividend would be an additional 250 shares, so you would have 1250 shares in total.  However, the stock price would likely go to $80 per share:

1000 x 100 is 100000
1250 x  80 is 100000

You still have $100000 of value in your position.  If it were a cash dividend, the stock price should also drop by the amount paid.
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