Suppose the stock of 

HostHost 

Hotels​ & Resorts is currently trading for 

$ 19$19 

per share.

**a.** If 

HostHost 

issued a 

22 %22% 

stock​ dividend, what would its new share price​ be?

**b.** If 

HostHost 

does a​ 3:2 stock​ split, what would its new share price​ be?

Question content area bottom

Part 1

**a.** If 

HostHost 

issued a 

22 %22% 

stock​ dividend, what would its new share price​ be?

If 

HostHost 

issued a 

22 %22% 

stock​ dividend, the new share price would be 

​$enter your response here 

per share.  ​(Round to the nearest​ cent.)

To solve this, we need to understand the effects of a stock dividend and a stock split.

### Part (a): Stock Dividend Calculation

When a company issues a stock dividend, the number of shares owned by each shareholder increases by a certain percentage, but the overall value of their holdings remains the same. This means the price per share will decrease, as the total market value is spread over a larger number of shares.

Given:
- Current stock price = $19
- Stock dividend = 22%

For a 22% stock dividend, the total number of shares will increase by 22%. To find the new price per share, we can use the following formula:

\[
\text{New share price} = \frac{\text{Old share price}}{1 + \text{Stock dividend percentage}}
\]

Substitute the values:

\[
\text{New share price} = \frac{19}{1 + 0.22} = \frac{19}{1.22}
\]

Now calculate:

\[
\text{New share price} \approx 15.57
\]

So, the new share price after the 22% stock dividend is **$15.57 per share**.

---

### Part (b): Stock Split Calculation

In a 3:2 stock split, for every 2 shares a shareholder owns, they will receive 3 shares. The number of shares increases, but the overall value remains the same, meaning the price per share will decrease.

The price per share after the split can be found using this formula:

\[
\text{New share price} = \frac{\text{Old share price} \times 2}{3}
\]

Substitute the values:

\[
\text{New share price} = \frac{19 \times 2}{3} = \frac{38}{3}
\]

Now calculate:

\[
\text{New share price} \approx 12.67
\]

So, the new share price after the 3:2 stock split is **$12.67 per share**.

---

### Summary:
- (a) The new share price after a 22% stock dividend is **$15.57**.
- (b) The new share price after a 3:2 stock split is **$12.67**.

Would you like any further details on the calculations or concepts involved? 

Here are 5 related questions to deepen your understanding:
1. How does a stock dividend differ from a cash dividend?
2. What are the long-term effects of repeated stock splits on a company's stock price?
3. Can a stock dividend increase a shareholder's overall wealth?
4. What is the impact of a stock split on the market capitalization of a company?
5. What are the potential reasons a company would choose to issue a stock dividend instead of a cash dividend?

**Tip:** When evaluating stock dividends or splits, remember that they don't inherently increase the value of your holdings—only the number of shares you own!

Suppose the stock of Host Hotels & Resorts is currently trading for $19 per share.

a. If Host issued a 22% stock dividend, what would its new share price be?

b. If Host does a 3:2 stock split, what would its new share price be?

Learn how to calculate the new share price for Host Hotels & Resorts after a 22% stock dividend and a 3:2 stock split. This guide covers essential financial concepts and includes detailed steps with key formulas. Perfect for students in Grades 9-12.

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