On July 20, 2004, Microsoft surprised the market by announcing a $3 dividend. The
Chapter 10, Problem 10.29(choose chapter or problem)
On July 20, 2004, Microsoft surprised the market by announcing a $3 dividend. The exdividend date was November 17, 2004, and the payment date was December 2, 2004. Its stock price at the time was about $28. It also changed the terms of its employee stock options so that each exercise price was adjusted downward to Predividend exercise price Closing price $3:00 Closing price The number of shares covered by each stock option outstanding was adjusted upward to Number of shares predividend Closing price Closing price $3:00 Closing Price means the official NASDAQ closing price of a share of Microsoft common stock on the last trading day before the ex-dividend date. Evaluate this adjustment. Compare it with the system used by exchanges to adjust for extraordinary dividends (see Business Snapshot 10.1).
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