Response to the following problem:
The Fissure Corporation currently has 2 million common shares of stock outstanding that is trading at $80 per share. The board of directors has decided that the current price per share is too high, preventing many smaller investors from buying even lots of 100 shares. They have decided that a more attractive stock price would be around $40 per share.
a. If they decide to use a stock dividend to reduce the share price, what would be the size of the stock dividend that would reduce the share price to the desirable level?
b. If they decide to use a stock split to reduce the share price, what would be the size of the stock split that would reduce the share price to the desirable level?