Question

"XYZ Corporation announces a 10% stock dividend, followed by a 5% "spin off" of a subsidiary business. A customer who owns 200 shares of XYZ will receive:"

Answer 1

20 shares of XYZ and 11 shares of the spin-off

Step-by-step explanation:

The 20 shares of XYS comes from

= 200 shares × 10%

= 20 shares-

So, the total number of shares now is

= 200 shares + 20 shares

= 220 shares

And there is 5% spin off

So, the number of shares contains spin off is

= 220 shares × 5%

= 11 shares

This represents the separate company

hence, there is 20 shares of XYZ and 11 shares of the spin-off