Firm can pay after liquidating all of its assets

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Reference no: EM131571518

One year ago, John Doe bought 10,000 shares of Galaxy Entertainment Company at $50 per share. His purchase represents 20 percent ownership in the firm. Today s market value per share is $60. If Galaxy Entertainment is bankrupt and owes $200,000 more in debts than the firm can pay after liquidating all of its assets, what is the maximum loss per share John Doe will incur on this investment?

a) $0 a share

b) $20 a share

c) $55 a share, computed as ($50 + 60)/2

d) $50 a share

e) $4 share, computed as (20% × $200,000)/10,000 shares

Reference no: EM131571518

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