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Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Consider the following case: Mainway Toy Company currently has 10,000 shares of common stock outstanding. Its management believes that its current stock price of $105 per share is too high. The company is planning to conduct stock splits in the ratio of 3 for 1 as described in the animation. 3 for 1 Stock split announcement Certificate Stock certificate or Story certificate or story $4 4 $4 O If Mainway Toy Company declares a 3-for-1 stock split, the price of the company's stock after the split, assuming that the total value of the firm's stock remains the same after the split, will be Scorecard Athletics Corp. is one of Mainway's leading competitors. Scorecard Athletics Corp.'s market intelligence research team shares Mainway's plans of announcing a stock split, influencing the distribution policy makers. Consequently, executives at Scorecard decide to offer stock dividends to its shareholders. A stock dividend is another way of keeping the stock price from going too high. Scorecard currently has 1,100,000 shares of common stock outstanding. If the firm pays a 5% stock dividend, how many shares will the firm issue to its existing shareholders? 55,000 shares 44,000 shares 57,750 shares 60,500 shares

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