A. Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors by… 1 answer below »

A.Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors by initiating a regular dividend of $1 per quarter or $4 per year. The stock price jumps to $90 when the payout is announced.

Don't use plagiarized sources. Get Your Custom Essay on
A. Seashore Salt Co. has surplus cash. Its CFO decides to pay back $4 per share to investors by… 1 answer below »
Just from $13/Page
Order Essay

a. Why does the stock price increase?

b. What happens to the stock price when the stock goes ex dividend?

B:An article on stock repurchase in the Los Angeles Times noted: “An increasing

number of companies are finding that the best investment they can make these days is in

themselves.” Discuss this view. How is the desirability of repurchase affected by company

prospects and the price of its stock?