FoundationNumeric answer
A parent company trading at spins off a subsidiary, distributing one subsidiary share for every five parent shares. The subsidiary begins trading at . All else equal, where should the parent trade after the spin-off?
Answer with a number. Fractions, powers and expressions like 23/6 or C(52,5) are read correctly in practice.
The worked solution is in Premium
The answer, the full working and the one idea to take away – for this and all 1,322 questions in the bank. Answer it in practice and your working is marked, with a known mistake named when you make one.
Learn the method
Corporate actions: adjustments, dividends and merger arbitrage
Reported in interviews at
More markets and products questions
- A stock closes at $80 the day before it goes ex-dividend on a $2 cash dividend.Foundation
- Pricing a deal spread, part 1 of 3Foundation
- A stock is announced for inclusion in a major index, effective in two weeks.Applied
- A stock at $60 declares a three-for-two split. What happens to the strike of a $60 call?Applied
- A target trades at $47 against a $50 all-cash offer, and would fall to $38 if…Applied
- An acquirer offers 0.5 of its own shares for each target share.Applied