QUIZ: Ch. 8.8 - 8.9 (Math for Finance)

Match the following

• Reverse Stock Split

• The total number of shares issued by a company and available to trade

• Penny Stock

• When a company increases the number of outstanding shares by issuing new shares to existing investors

• Traditional Stock Split

• A highly speculative company whose stock is worth less than $1

• Market Capitalization

• The total value of a company: To find out, you multiply outstanding shares and their share price

• Outstanding Shares

• When a company reduces the number of outstanding shares by combining a portion of shares into one larger share

When investing into a company whose stock price is rather expensive (i.e. $500 per share), is it possible to purchase a fraction of a share? Or do you have to purchase a full share each time?

• You have to purchase an entire share of a company.

• You're allowed to purchase Fractional Shares

[Ch. 8.8 Notes, Question #3] What is the perception when a company undergoes a traditional stock split?

• Shares are less affordable and it deters new investors

• Shares are more affordable, but it deters new investors

• Shares are less affordable, but it attracts new investors

• Shares are more affordable and it attracts new investors

[Ch. 8.8 Notes, Question #4] Which type of stocks typically undergo a reverse stock split?

• Big, Tech Stocks

• Big, Blue Chip Stocks

• Small, Penny Stocks

• Any stock I pick because I find all the ones that lose!!!

[Ch. 8.8 Notes, Question #6 part 1] What do you have to multiply the current stock price of Apple by, in order to see how much one share would actually cost before it experienced two stock splits?

• 15

• 48

• 224

• 596

Suppose 50 Cent wrote the song Candy Shop because he was inspired by the song Tootsie Roll. And suppose '50' was interested in buying some shares of Tootsie Roll (Symbol: TR) and used the song to help promote the stock.

Question: If '50' had purchased exactly 333 shares of TR at $32.10 per share and the next day, the company announced a 3-for-1 traditional stock split, how many shares of Tootsie Roll would '50' have after the traditional stock split was complete?

Suppose 50 Cent wrote the song Candy Shop because he was inspired by the song Tootsie Roll. And suppose '50' was interested in buying some shares of Tootsie Roll (Symbol: TR) and used the song to help promote the stock.

Question: If '50' had purchased exactly 333 shares of TR at $32.10 per share and the next day, the company announced a 3-for-1 traditional stock split, how much would each share be worth after the traditional stock split was complete?

Domino's Pizza currently has 35.88 million outstanding shares and is currently trading at $455 per share.

Question: If in the past, Dominos went through a 4-for-1 TRADITIONAL stock split, how many outstanding shares did they USED TO HAVE? (*Remember, they currently have 35.88 million outstanding shares.)

Domino's Pizza currently has 35.88 million outstanding shares and is currently trading at $455 per share.

Question: If in the past, Dominos went through a 4-for-1 TRADITIONAL stock split, how much WAS THE PRICE of 1 share back then? (*Remember, the current price is $455.)

• $1,820

• $113.75

Petco (Symbol: WOOF) is currently at a share price of $3.45 with 230,700,000 outstanding shares. Let's say you like dogs, you know other people like dogs, and you have some friends that you call "my dawg!" So you decide to buy 220 shares of WOOF.

Question: If the next day, WOOF undergoes a 1-for-6 Reverse Stock Split, how many outstanding shares would there be?