FIN FINAL

The ex-dividend date is defined as _____ business day(s) before the date of record.

2

Which of the following account balance changes occur as a result of a large stock dividend? I. increase in common stock II. decrease in capital in excess of par III. increase in capital in excess of par IV. decrease in retained earnings

C. I and IV only

be weighted and included in the initial cash flow.

D. increase the initial cash outflow of the project.

If a firm uses its WACC as the discount rate for all of the projects it undertakes then the firm will tend to: I. reject some positive net present value projects. II. accept some negative net present value projects. III. favor high risk projects over low risk projects. IV. increase its overall level of risk over time.

E. I, II, III, and IV

The weighted average cost of capital for a firm may be dependent upon the firm's: I. rate of growth. II. debt-equity ratio. III. preferred dividend payment. IV. retention ratio.

E. I, II, III, and IV

Which of the following tends to increase the ability of a shareholder to create his or her own homemade dividend policy? I. low taxes on capital gains II. dividend reinvestment plans III. large holdings of shares IV. low cost equity purchases

E. I, II, III, and IV

Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7th. Ted purchased 100 shares of Fast Deliveries stock on Thursday, July 8th. Fast Deliveries declared a dividend on June 20th to shareholders of record on July 12th and payable on August 1st. Which one of the following statements concerning the dividend paid on August 1st is correct given this information?

Kate is entitled to the dividend but Ted is not.

Which one of the following states that the value of a firm is unrelated to the firm's capital structure?

M & M Proposition I

The concept of homemade leverage is most associated with:

M & M Proposition I with no tax.

A firm's overall cost of equity is:

\highly dependent upon the growth rate and risk level of the firm.

The dividend market is in equilibrium when

all clienteles are satisfied

Flotation costs for a levered firm should:

be weighted and included in the initial cash flow.

Which one of the following is the equity risk that is most related to the daily operations of a firm?

business risk

Textile Mills borrows money at a rate of 13.5 percent. This interest rate is referred to as the:

cost of debt.

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month. In relation to this dividend, today is referred to as which one of the following dates?

declaration date

The explicit costs, such as legal and administrative expenses, associated with corporate default are classified as _____ costs.

direct bankruptcy

The aftertax cost of debt:

has a greater effect on a firm's cost of capital when the debt-equity ratio increases.

The pre-tax cost of debt

is based on the current yield to maturity of the firm's outstanding bonds

The cost of preferred stock:

is equal to the dividend yield.

Assigning discount rates to individual projects based on the risk level of each project:

may cause the firm's overall weighted average cost of capital to either increase or decrease over time.

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

permits key employee retention plans only if an employee has another job offer.

HJ Corporation has excess cash and has opted to buy some of its shares of outstanding common stock. What is this process of buying called?

stock repurchase

Bankruptcy:

transfers value from shareholders to bondholders

Which one of the following is the primary determinant of a firm's cost of capital?

use of the funds

If a firm has the optimal amount of debt, then the:

value of the levered firm will exceed the value of the firm if it were unlevered

The value of a firm is maximized when the

weighted average cost of capital is minimized.

The average of a firm's cost of equity and aftertax cost of debt that is weighted based on the firm's capital structure is called the:

weighted average cost of capital.

The absolute priority rule determines:

which parties receive payment first in a bankruptcy proceeding.

Which one of the following is a result of a stock repurchase?

PE ratio equal to that resulting from a comparable cash dividend

Give an example of a situation where a firm should adopt the pure play approach for determining the cost of capital for a project.

Student examples will vary but should illustrate a project that is unrelated to the current operations of Firm A. The example should explain why the WACC of Firm B, which is engaged in the type of operations Firm A is considering, should be used as the basis for setting the discount rate for the proposed project.

Morris Industries has a capital structure of 55 percent common stock, 10 percent preferred stock, and 45 percent debt. The firm has a 60 percent dividend payout ratio, a beta of 0.89, and a tax rate of 38 percent. Given this, which one of the following statements is correct?

The firm's cost of equity is unaffected by a change in the firm's tax rate

Morris Industries has a capital structure of 55 percent common stock, 10 percent preferred stock, and 45 percent debt. The firm has a 60 percent dividend payout ratio, a beta of 0.89, and a tax rate of 38 percent. Given this, which one of the following statements is correct?

The firm's cost of equity is unaffected by a change in the firm's tax rate.

What are some advantages of the subjective approach to determining the cost of capital and why do you think that approach is utilized?

The subjective approach allows management to adjust a firm's overall cost of capital for individual divisions based upon its evaluation of the risks associated with each division as compared to the overall risk level of the firm. This risk adjustment is based on the wisdom, knowledge, and experiences of the managers. To try and determine a more accurate estimate of the appropriate discount rate might encounter costs that would outweigh any potential benefit. Thus, the subjective approach is useful because it adjusts discount rates in a cost effective and efficient manner.

Which one of the following statements correctly applies to U.S. industrial firms based on the period of 1984-2004?

The total amount of dividends paid by these firms was greater in 2004 than in 1984.

Which one of the following statements related to Chapter 7 bankruptcy is correct?

Under a Chapter 7 bankruptcy, a trustee will assume control of the firm's assets until those assets can be liquidated.

A reverse stock split is defined as

a decrease in the number of shares outstanding that does not affect owners' equity.

Stock splits can be used to

adjust the market price of a stock such that it falls within a preferred trading range.

The dividend market is in equilibrium when:

all clienteles are satisfied

The capital structure weights used in computing the weighted average cost of capital:

are based on the market value of the firm's debt and equity securities

The subjective approach to project analysis

assigns discount rates to projects based on the discretion of the senior managers of a firm.

Which one of the following is the legal proceeding under which an insolvent firm can be reorganized?

bankruptcy

Scholastic Toys is considering developing and distributing a new board game for children. The project is similar in risk to the firm's current operations. The firm maintains a debt-equity ratio of 0.40 and retains all profits to fund the firm's rapid growth. How should the firm determine its cost of equity?

by using the capital asset pricing model

The common stock of Pierson Enterprises has historically had a high dividend yield and is expected to continue to do so. As a result, the majority of its shareholders are individuals and entities that are seeking a regular source of cash income. Most of these shareholders pay either no taxes or a relatively low amount of taxes. The fact that most of these shareholders have similar characteristics is referred to by which one of the following terms?

clientele effect

A group of individuals got together and purchased all of the outstanding shares of common stock of DL Smith, Inc. What is the return that these individuals require on this investment called?

cost of equity

Which one of the following dates is used to determine the names of shareholders who will receive a dividend payment?

date of record

Dividend payments are mailed on which one of the following dates?

ex-dividend date

Which one of the following refers to the ability of shareholders to undo a firm's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?

homemade dividend policy

Which one of the following makes the capital structure of a firm irrelevant?

homemade leverage

The cost of equity for a firm:

ignores the firm's risks when that cost is based on the dividend growth model.

A one-for-four reverse stock split will:

increase a $1 par value to $4

Which one of the following is a result of a small stock dividend?

increase in common stock

When a firm has flotation costs equal to 7 percent of the funding need, project analysts should:

increase the initial project cost by dividing that cost by (1 - 0.07).

The costs incurred by a business in an effort to avoid bankruptcy are classified as _____ costs.

indirect bankruptcy

Butter & Jelly reduced its taxes last year by $350 by increasing its interest expense by $1,000. Which of the following terms is used to describe this tax savings?

interest tax shield

Which form of financing do firms prefer to use first according to the pecking-order theory?

internal funds

A stock repurchase program:

is essentially the same as a cash dividend program provided there are no taxes or other costs

The information content of a dividend increase generally signals that

management believes earnings growth will be strong going forward

A firm should select the capital structure that:

maximizes the value of the firm.

The capital structure that maximizes the value of a firm also:

minimizes the cost of capital.

Which one of the following is a direct bankruptcy cost? A. company CEO's time spent in bankruptcy court B. maintaining cash reserves C. maintaining a debt-equity ratio that is lower than the optimal ratio D. losing a key company employee E. paying an outside accountant fees to prepare bankruptcy reports

paying an outside accountant fees to prepare bankruptcy reports

Which one of the following will generally have the highest priority when assets are distributed in a bankruptcy proceeding?

payment of employee wages

Markley and Stearns is a multi-divisional firm that uses its WACC as the discount rate for all proposed projects. Each division is in a separate line of business and each presents risks unique to those lines. Given this, a division within the firm will tend to:

prefer higher risk projects over lower risk projects.

When a manager develops a cost of capital for a specific project based on the cost of capital for another firm which has a similar line of business as the project, the manager is utilizing the _____ approach

pure play

The weighted average cost of capital for a firm is the:

rate of return a firm must earn on its existing assets to maintain the current value of its stock.

A $0.60 quarterly cash payment paid by T.L. Jones & Co. to its shareholders in the normal course of business is called a

regular cash dividend

The cost of preferred stock is computed the same as the:

return on a perpetuity.

Nelson's Landscaping has 1,200 bonds outstanding that are selling for $990 each. The company also has 2,500 shares of preferred stock at a market price of $28 a share. The common stock is priced at $37 a share and there are 28,000 shares outstanding. What is the weight of the common stock as it relates to the firm's weighted average cost of capital?

see photos

AA Tours is comparing two capital structures to determine how to best finance its operations. The first option consists of all equity financing. The second option is based on a debt-equity ratio of 0.45. What should AA Tours do if its expected earnings before interest and taxes (EBIT) are less than the break-even level? Assume there are no taxes.

select the unlevered option since the expected EBIT is less than the break-even level

Holdup Bank has an issue of preferred stock with a $5 stated dividend that just sold for $92 per share. What is the bank's cost of preferred stock?

stated dividend/selling price=5.43%

Which one of the following involves a payment in shares by a stock issuer that increases the number of shares a shareholder owns but also decreases the value per share?

stock dividend

Homemade leverage is:

the borrowing or lending of money by individual shareholders as a means of adjusting their level of financial leverage

What is the information content effect?

the financial market's reaction to a change in the amount of a firm's dividend

The interest tax shield is a key reason why

the net cost of debt to a firm is generally less than the cost of equity

The discount rate assigned to an individual project should be based on:

the risks associated with the use of the funds required by the project

The proposition that a firm borrows up to the point where the marginal benefit of the interest tax shield derived from increased debt is just equal to the marginal expense of the resulting increase in financial distress costs is called:

the static theory of capital structure.

Which one of the following favors a low dividend policy?

the tax on capital gains is deferred until the gain is realized

The basic lesson of M & M Theory is that the value of a firm is dependent upon:

the total cash flow of the firm.

M & M Proposition I with taxes is based on the concept that:

the value of a firm increases as the firm's debt increases because of the interest tax shield

M & M Proposition I with taxes is based on the concept that:

the value of a firm increases as the firm's debt increases because of the interest tax shield.

The flotation cost for a firm is computed as:

the weighted average of the flotation costs associated with each form of financing.

A firm wants to maintain a minimum stock price of $15 a share. Due to a recent market downturn, the stock is currently selling for $6 a share. The firm should consider a:

1-for-3 reverse stock split.

A small stock dividend is defined as a stock dividend of less than _____ percent.

20 to 25

The last date on which you can purchase shares of stock and still receive the dividend is the date which is _____ business days prior to the date of record

3

Which one of the following statements related to cash dividends is correct?

A dividend is never a liability until it has been declared

Which one of the following statements related to cash dividends is correct? A. Extra cash dividends cannot be repeated in the future. B. A dividend is never a liability until it has been declared. C. If a firm has paid regular quarterly dividends for at least five consecutive years it is legally obligated to continue doing so. D. Regular cash dividends reduce paid-in capital. E. The dividend yield expresses the annual dividend as a percentage of net income.

A dividend is never a liability until it has been declared.

Which one of the following statements related to stock repurchases is correct?

A firm may spend more cash over the course of a year on stock repurchases than it does on cash dividends.

Which one of the following statements is correct concerning the relationship between a levered and an unlevered capital structure? Assume there are no taxes.

A. At the break-even point, there is no advantage to debt.

Which one of the following statements related to dividend policy is correct?

Dividend policy focuses on the timing of dividend payments.

Which of the following statements are correct in relation to M & M Proposition II with no taxes? I. The required return on assets is equal to the weighted average cost of capital. II. Financial risk is determined by the debt-equity ratio. III. Financial risk determines the return on assets. IV. The cost of equity declines when the amount of leverage used by a firm rises.

I and II only

Which two of the following are the best justifications for a reverse stock split? I. combine a reverse stock split with a stock repurchase to enable a firm to go dark II. increase the respectability of the stock III. avoid delisting IV. reduce transaction costs for shareholders

I and III only

If you ignore taxes and costs, a stock repurchase will: I. reduce the total assets of a firm. II. decrease the earnings per share. III. reduce the PE ratio more so than an equivalent stock dividend. IV. reduce the total equity of a firm.

I and IV only

Which of the following are correct according to pecking-order theory? I. Firms stockpile internally-generated cash. II. There is an inverse relationship between a firm's profit level and its debt level. III. Firms avoid external debt at all costs. IV. A firm's capital structure is dictated by its need for external financing.

I, II, and IV only

The interest tax shield has no value when a firm has a:

I, III, and IV only

Explain how the use of internal equity rather than external equity affects the analysis of a project.

Internal equity avoids the flotation costs associated with raising external equity. Therefore, by utilizing internal equity rather than external equity, the initial cost of the project is decreased. Decreasing the initial cost increases the NPV of the project.

All else equal, the market value of a stock will tend to decrease by roughly the aftertax value of the dividend on the:

B. ex-dividend date.

An investor is more likely to prefer a high dividend payout if a firm

has few, if any, positive net present value projects.

The dividend growth model can be used to compute the cost of equity for a firm in which of the following situations? I. firms that have a 100 percent retention ratio II. firms that pay a constant dividend III. firms that pay an increasing dividend IV. firms that pay a decreasing dividend

E. II, III, and IV only

By definition, which of the following costs are included in the term "financial distress costs"? I. direct bankruptcy costs II. indirect bankruptcy costs III. direct costs related to being financially distressed, but not bankrupt IV. indirect costs related to being financially distressed, but not bankrupt

I, II, III, and IV

The aftertax cost of debt generally increases when: I. a firm's bond rating increases. II. the market rate of interest increases. III. tax rates decrease. IV. bond prices rise.

II and III only

You have computed the break-even point between a levered and an unlevered capital structure. Assume there are no taxes. At the break-even level, the:

firm is just earning enough to pay for the cost of the debt

What role does the weighted average cost of capital play when determining a project's cost of capital?

Assuming a project is equally as risky as a firm's current operations, WACC will be used as the discount rate when computing the NPV of the project. Therefore, having an accurate WACC is essential to correctly evaluating the project. If a project has a different risk level than the firm's current operations, then the firm's WACC should be adjusted in accordance with the project's risk or in some instances, a different firm's WACC should be applied as the discount rate for the project.

Stock repurchase programs appear to becoming more popular with business firms. Explain the appeal of these programs as compared to that of cash dividend programs from the stock issuer's point of view.

Both stock repurchase and cash dividend programs are mechanisms for transferring excess funds from a corporation to its shareholders. Dividend programs, once commenced, require an ongoing cash outflow that is difficult to reduce or terminate. Stock repurchase programs on the other hand, are structured such that a firm can control both the timing and the amount of the cash outflows. While a stock repurchase program is frequently announced, there is no commitment to actually purchase the shares. This provides a lot more flexibility to the firm than a dividend program.

Which of the following tend to keep dividends low? I. shareholders desiring current income II. terms contained in bond indenture agreements III. the desire to maintain constant dividends over time IV. flotation costs

C. II, III, and IV only

Explain how cash dividends affect individual shareholders differently than an equal amount of funds spent on a repurchase.

Dividends are payable to all shareholders on an equal per share basis with the income taxed as dividend income when received. Shareholders have no control over the timing of this dividend income and thus, no control over the timing of their tax liability. A repurchase affects only those shareholders who opt to sell shares. The shareholders who participate in a repurchase will generally pay taxes at the capital gains rate with the tax liability created at the time of sale, which is controlled by the shareholder. Shareholders who do not participate in the repurchase program receive no cash and incur no taxes. Thus, a repurchase allows shareholders to control the timing of their income and their related tax liability. Also, it should be noted that investor preferences for either dividends or capital gains depends upon the tax laws that are in existence at a particular point in time

Which one of the following statements appears to be supported by the current dividend policies of U.S. industrial firms?

Dividends are still viewed by shareholders as a signal of a firm's future outlook.

A firm may file for Chapter 11 bankruptcy: I. in an attempt to gain a competitive advantage. II. using a prepack. III. while allowing the current management to continue running the firm. IV. only after the firm becomes insolvent.

I, II, and III only

Which of the following shareholders tend to favor a high dividend policy? I. retired individuals II. endowment funds III. corporate investors IV. investors with high dividend tax rates but low capital gains tax rates

I, II, and III only

Which of the following statements related to financial risk are correct? I. Financial risk is the risk associated with the use of debt financing. II. As financial risk increases so too does the cost of equity. III. Financial risk is wholly dependent upon the financial policy of a firm. IV. Financial risk is the risk that is inherent in a firm's operations.

I, II, and III only

The interest tax shield has no value when a firm has a: I. tax rate of zero. II. debt-equity ratio of 1. III. zero debt. IV. zero leverage.

I, III, and IV only

Automatic dividend reinvestment plans: I. require that stockholders reinvest all of the dividends to which they are entitled. II. sometimes grant shareholders the privilege of purchasing additional shares at a discounted price. III. help shareholders create their own homemade dividend policies. IV. help make corporate dividend policies irrelevant to individual stockholders

II, III, and IV only

Which of the following balance sheet accounts are affected by a small stock dividend? I. cash II. common stock III. retained earnings IV. capital in excess of par value

II, III, and IV only

Which one of the following statements is correct?

Overall, a firm makes better decisions when it uses the subjective approach than when it uses its WACC as the discount rate for all projects.

Which one of the following statements is correct? A. The subjective approach assesses the risks of each project and assigns an adjustment factor that is unique just for that project. B. Overall, a firm makes better decisions when it uses the subjective approach than when it uses its WACC as the discount rate for all projects. C. Firms will correctly accept or reject every project if they adopt the subjective approach. D. Mandatory projects should only be accepted if they produce a positive NPV when the firm's WACC is used as the discount rate. E. The pure play approach should only be used with low-risk projects.

Overall, a firm makes better decisions when it uses the subjective approach than when it uses its WACC as the discount rate for all projects.

Identify some real-world factors which might make it more difficult for an individual to effectively create a homemade dividend policy

Students should address factors such as taxes, transaction costs, and investment earnings. If selling $100 of securities is not equal to receiving $100 of dividend income on an aftertax basis, then investors will have a preference for one over the other. Selling small amounts of securities on a frequent basis tends to result in significant transaction costs making such trading undesirable. Receiving dividend income today and then investing that income for a short period of time, say a year or two, may yield less than desirable results if the interest rate available for such investments is low, which would generally be the case for many shareholders. Thus, effectively creating a homemade dividend policy may not be as simple as it sounds, especially for investors with smaller portfolios.

The present value of the interest tax shield is expressed as:

Tc × D.

Which one of the following statements is correct for a firm that uses debt in its capital structure?

The WACC should decrease as the firm's debt-equity ratio increases

Pete is the CFO of Dexter International. He would like to increase the debt-equity ratio of the firm but is concerned that the firm's shareholders may not be willing to accept additional financial leverage. Pete has come to you for advice. What is your recommendation?

The capital structure of the firm is irrelevant to the shareholders because they can use homemade leverage to adjust their exposure to financial leverage to whatever level they prefer. Thus, Pete can increase the debt-equity ratio of the firm if he feels it is in the best interest of the firm to do so.

Which one of the following statements related to the SML approach to equity valuation is correct? Assume the firm uses debt in its capital structure.

The model is dependent upon a reliable estimate of the market risk premium

Explain the meaning of the dividend clientele effect and why it is important

There are certain groups that prefer low dividend payouts and certain groups that prefer high dividend payouts; these are dividend clienteles. If clienteles exist, then whenever a firm changes its dividend policy, it just swaps one clientele for another. In the end, the firm cannot affect its value by making changes in its dividend policy unless there are unsatisfied clienteles.

Explain the meaning of the dividend clientele effect and why it is important.

There are certain groups that prefer low dividend payouts and certain groups that prefer high dividend payouts; these are dividend clienteles. If clienteles exist, then whenever a firm changes its dividend policy, it just swaps one clientele for another. In the end, the firm cannot affect its value by making changes in its dividend policy unless there are unsatisfied clienteles.

In each of the theories of capital structure, the cost of equity increases as the amount of debt increases. So why don't financial managers use as little debt as possible to keep the cost of equity down? After all, aren't financial managers supposed to maximize the value of a firm?

This question requires students to differentiate between the cost of equity and the weighted average cost of capital. In fact, it gets to the essence of capital structure theory: the firm trades off higher equity costs for lower debt costs. The shareholders benefit (to a point, according to the static theory) because their investment in the firm is leveraged, enhancing the return on their investment. Thus, even though the cost of equity rises, the overall cost of capital declines (again, up to a point according to the static theory) and firm value rises.

Based on the M & M propositions with and without taxes, how much time should a financial manager spend analyzing the capital structure of a firm? What if the analysis is based on the static theory?

Under either M & M scenario, a financial manager should not spend time analyzing the firm's capital structure. With no taxes, capital structure is irrelevant. With taxes, M & M says a firm will maximize its value by using 100 percent debt. In both cases, the manager has nothing to decide. With the static theory, however, the manager must determine the optimal amount of debt and equity by analyzing the tradeoff between the benefits of the interest tax shield versus the financial distress costs. Finding the optimal capital structure is challenging in this case.

Suppose your boss comes to you and asks you to re-evaluate a capital budgeting project. The first evaluation was in error, he explains, because it ignored flotation costs. To correct for this, he asks you to evaluate the project using a higher cost of capital which incorporates these costs. Is your boss' approach correct? Why or why not?

Your boss is confused since it is the use of funds, and not the source of funds, that determines the cost of capital. Flotation costs should be included in the initial cash flow of a project and not in the cost of capital.

All else constant, which one of the following will increase a firm's cost of equity if the firm computes that cost using the security market line approach? Assume the firm currently pays an annual dividend of $1 a share and has a beta of 1.2.

a reduction in the risk-free rate

A firm's cost of capital: A. will decrease as the risk level of the firm increases. B. for a specific project is primarily dependent upon the source of the funds used for the project. C. is independent of the firm's capital structure. D. should be applied as the discount rate for any project considered by the firm.

depends upon how the funds raised are going to be spent

Green Roof Motels has more cash on hand than its operations require. Thus, the firm has decided to pay out some of its earnings in the form of cash to its shareholders. What are these payments to shareholders called?

dividends

The static theory of capital structure advocates that the optimal capital structure for a firm

equates the tax savings from an additional dollar of debt to the increased bankruptcy costs related to that additional dollar of debt.

The static theory of capital structure advocates that the optimal capital structure for a firm:

equates the tax savings from an additional dollar of debt to the increased bankruptcy costs related to that additional dollar of debt.

The business risk of a firm:

has a positive relationship with the firm's cost of equity.

Steve owns 3,000 shares of NOP, Inc. stock, which he purchased six years ago at a price of $22 a share. Today, these shares are selling for $68 each. Assume the current tax laws are such that Steve is subject to a tax rate of 25 percent on both his dividend income and his capital gains. From Steve's point of view, a stock repurchase today: (Ignore costs)

is more desirable than a cash dividend in respect to taxes.

The dividend growth model:

is only as reliable as the estimated rate of growth.

The weighted average cost of capital for a wholesaler:

is the return investors require on the total assets of the firm.

S.L. Moffatt, Inc. has paid a quarterly dividend of $1.20 per share for the last ten quarters. Which one of the following is most apt to cause the firm to reduce the amount of its next dividend payment?

loss of a major customer which lowers the firm's outlook for the next few years

The fact that flotation costs can be significant is an argument for:

maintaining a high dividend policy.

Wilderness Adventures specializes in back-country tours and resort management. Travel Excitement specializes in making travel reservations and promoting vacation travel. Wilderness Adventures has an aftertax cost of capital of 13 percent and Travel Excitement has an aftertax cost of capital of 11 percent. Both firms are considering building wilderness campgrounds complete with man-made lakes and hiking trails. The estimated net present value of such a project is estimated at $87,000 at a discount rate of 11 percent and -$12,500 at a 13 percent discount rate. Which firm or firms, if either, should accept this project?

neither Wilderness Adventures nor Travel Excitement

When a manager develops a cost of capital for a specific project based on the cost of capital for another firm which has a similar line of business as the project, the manager is utilizing the _____ approach.

pure play

Sligo Minerals stock is currently trading at $6 a share. The firm believes its primary clientele can afford to spend between $1,500 and $2,000 to purchase a round lot of 100 shares. The firm should consider a:

reverse stock split.