Stock splits Personal Finance Problem Nathan Detroit owns 200 shares of Monster Beverage Corp., which he purchased f
Posted: Tue Jan 18, 2022 12:57 pm
Stock splits Personal Finance Problem Nathan Detroit owns 200
shares of Monster Beverage Corp., which he purchased for
$118 per share. Nathan read that the company's board of
directors voted to split the stock 5-for-1. Just before the
stock split, Monster Beverage shares were trading for
$130.19.
Answer the following questions about the impact of the
stock split on his holdings and taxes. Nathan is in the 24% federal
income tax bracket.
a. How many shares of Monster Beverage will Nathan own after
the stock split?
b. After the split, what do you expect the price of
Monster Beverage to be?
c. Compare the total of Nathan's holdings before and
after the split. What do you find?
d. Does Nathan experience a gain or loss on the stock as a
result of the 5-for-1 split?
e. What is Nathan's tax liability from
the event?
shares of Monster Beverage Corp., which he purchased for
$118 per share. Nathan read that the company's board of
directors voted to split the stock 5-for-1. Just before the
stock split, Monster Beverage shares were trading for
$130.19.
Answer the following questions about the impact of the
stock split on his holdings and taxes. Nathan is in the 24% federal
income tax bracket.
a. How many shares of Monster Beverage will Nathan own after
the stock split?
b. After the split, what do you expect the price of
Monster Beverage to be?
c. Compare the total of Nathan's holdings before and
after the split. What do you find?
d. Does Nathan experience a gain or loss on the stock as a
result of the 5-for-1 split?
e. What is Nathan's tax liability from
the event?