Question

February 2019, Sierra paid $4,500 to acquire 150 shares of CGL stock. In December 2021, CGL declared a two-for-one stock split. If there were no subsequent adjustments, what is Sierra's current basis in the stock, and how many shares does she own?

Answer 1

The computation shows that after the split, the number of shares will be 300.

How to illustrate the information?

From the information, Sierra paid $4,500 to acquire 150 shares of CGL stock. In December 2021, CGL declared a two-for-one stock split.

Therefore, the number of current basis is 150.

After the split, the number of shares will be:

= 150 × (2/1)

= 150 × 2

= 300

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