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Scorpion4ik [409]
3 years ago
6

A customer has purchased 1,000 shares of ABC stock at $44 per share, paying a commission of $1.00 per share for the transaction.

ABC stock declares a 20% stock dividend. When the dividend is paid, the tax status of the investment is:A. 1,000 shares held at a cost basis of $44 per share
B. 1,000 shares held at a cost basis of $45 per share
C. 1,200 shares held at a cost basis of $36.66 per share
D. 1,200 shares held at a cost basis of $37.50 per share
Business
1 answer:
Sonbull [250]3 years ago
3 0

Answer:

Option D) 1,200 shares held at a cost basis of $37.50 per share

Explanation:

Data provided in the question:

Number of shares of ABC stocks purchased by the customer = 1,000

Price per share of ABC stock = $44

Commission paid = $1.00 per share

Stock dividend declared = 20%

Now,

The Payment of a stock dividend will increase the number of shares held by the investor

also,

each share is theoretically worth less after the stock dividend is paid.

Therefore,

The number of shares customer will have = Shares purchased × (1 + Dividend declared)

= 1000 × ( 1 + 0.20)

= 1200 shares

Also,

Cost basis for the share = Selling price + Commission

= $44 + $1

= $45

Thus,

The adjusted cost basis = $45 ÷ 1.20

= $37.50 per share

Hence,

Option D) 1,200 shares held at a cost basis of $37.50 per share

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Nataly_w [17]
I think ur answer is C
3 0
3 years ago
During periods of decreasing costs, the use of the LIFO method of costing inventory will result in a lower amount of net income
gladu [14]

Answer:

b. False

Explanation:

LIFO stand for Last in First Out. This means LIFO inventory valuation is based on earlier goods purchased.

So, when costs are decreasing, they are affecting latter prices and this usually affect FIFO (First in First Out) not LIFO.

7 0
3 years ago
Your analyst team has received a request for system development that focuses on moving the current system into a new operating e
LenaWriter [7]

The key source of the development requests likely to be generated to  Information system managers. Therefore the correct option is (D).

<h3>What is Information System Management? </h3>

The Information system of Management refers to the management of the data, facts, figures or information of the system in the computer by the organizations.

According to the above scenario, The system development team is focusing on the adopting the operating environment system which is adopted by the Information system managers

Therefore the correct option is (D).

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8 0
1 year ago
Bond P is a premium bond with a 10 percent coupon. Bond D is a 5 percent coupon bond currently selling at a discount. Both bonds
ale4655 [162]

Let Bond par value be 1000

Bond P:

Coupon rate=10%

YTM=7%

time=9 years

Calculation of current price:

Particulars Year Amount PV Factor  YTM=7% Present value

Ineterest 1-9 years 100 6.515232 651.52

Value 9 1000 0.543934 543.93

       1195.45

Current price =1195.45

Current yield=Annual interest based on coupon rate*100/current price

The current yield of Bond P=100*100/1195.45=8.37%

Bond D:

Coupon rate=5%

YTM=7%

time=9 years

Calculation of current price:

Particulars Year Amount PV Factor  YTM=7% Present value

Interest 1-9 years 50 6.515232 325.76

Value 9 1000 0.543934 543.93

       869.69

Current price =869.69

Current yield=Annual interest based on coupon rate*100/current price

The current yield of Bond D=50*100/869.69=5.75%

Capital gains yield

current price bond P=1195.45

Next year's price bond P=100°5.971299+1000*0.582009=1179.14

The capital gain yield on bond P=(next year price-current price)/current price

                                       =(1179.14-1195.45)/1195.45

                                       =-1.36%

current price bond D=869.69

Next year's price bond D=505.971299+1000*0.582009=880.57

The capital gain yield on bond D=(next year price-current price)/current price

                                       =(880.57-869.69)/869.69

                                       =1.25%.

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6 0
1 year ago
What college should I got to, to become a singer/songwriter? i live in Oklahoma, if it helps.
netineya [11]

Answer:

Florida State. I'm a singer and they offer a surplus of aid toward my music career.

Explanation:

7 0
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