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2013-04-09
Bluff, Inc.’s stock transactions during the year were as follows:

  • January     1                          90,000     common shares outstanding.
  • April 1                                   20% stock dividend is declared and issued.
  • October 1                             10,000 shares are reacquired as treasury stock.
What is Bluff’s weighted average number of shares outstandingduring the year?
A. 98,000.
B. 101,000.
C. 105,500.


答案:
  Initial shares: 90,000 × 1.20 =    108,000  
  – Reacquired treasury shares: 10,000 × 3/12 =    –2,500  
  105,500  
那个Initial share为啥要乘以1.2呢?求解。。

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2013-4-9 21:52:49
cus u "paid" a stock dividend, which is not really a cash payment, but rather increases your stock outstanding by 20%. and the rule is if u issue stock dividends during a year, then the outstanding after stock dividends should be dated back to the beginning of the year. (also ignore the original standing before) so effectively, for weighted average, u count the "split" stock outstanding for a whole year, and the buyback for a quarter.
in short, deal with a stock dividend same way as a split, and a stock dividend is totally different from a dividend (of a stock).
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2013-4-21 10:42:13
stock dividend 20%
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