In a single day, the market price of IBM’s capital stock dropped over $31 per share, falling from $135 to $103.25. Of course, this was not a typical day. The date, October 19, 1987, will long be remembered as "Black Monday." On this day, stock prices around the world suffered the greatest one-day decline in history.
Stocks listed on the New York Stock Exchange lost about 20 percent of their value in less than six hours. Given that the annual dividends on these stocks averaged about 2 percent of their market value, this one-day market loss was approximately equal to the loss by investors of all dividend revenue for about 10 years.
How did this disastrous decline in IBM’s stock price directly affect the balance sheet of IBM on October 19, 1987?
Why stock prices declined of IBM’s company and explain the scenario of New York Stock Exchange, why listed company in this exchange lost their 20 percent value in less than six hours? Also discuss about the background of the company.