Carrot Top Farms is a primary supplier of fresh vegetables. Due to a major droug
ID: 2767490 • Letter: C
Question
Carrot Top Farms is a primary supplier of fresh vegetables. Due to a major drought, almost all of the crops were lost for this season. As a result, the firm's stock has plummeted in value and is currently priced at $4.10 a share. The exchange on which the stock trades requires that the minimum stock price be $20 a share. The firm has decided to do a reverse stock split to avoid delisting. However, when it does this, the firm wants the stock price increased to at least 1.8 times the minimum exchange required price. Which one of the following stock split ratios is the minimum needed in this situation?
a. 7-for-1
b. 8-for-1
c. 9-for-1
d. 10-for-1
e. 12-for-1
Explanation / Answer
Carrot Top Farms Details Amt $/ Ratio Current Stock price 4.10 Required stock price =Min Stock price for Listing *1.8= 36.00 Reverse Split Required =36/4.1= 8.78 So the minimum Reverse stock split required is 9 for 1 Option C is correct.