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Zorluk: OrtaSettlement Dates, Trade Confirmations, and Corporate Actions

An investor holds 400400 shares of XYZ Corporation common stock purchased at an average price of $60.00\$60.00 per share in a retail cash account. The corporation declares and executes a 55-for-44 forward stock split. What is the investor's adjusted cost basis per share (in dollars) following the completion of the corporate action?

Cevap: 48 dollars

Cevap

The investor's adjusted cost basis per share following the 5-for-4 stock split is $48.00.
When a corporation executes a 5-for-4 forward stock split, shareholders receive 5 shares for every 4 shares held. The total dollar value of the position and overall cost basis remain unchanged at 24,000(24,000 ( 400 shares × 60.00).Thenewsharecountbecomes500shares(60.00). The new share count becomes 500 shares ( 400 × 5/4 ).Dividingthe). Dividing the 24,000 total cost basis by 500 shares yields an adjusted per-share cost basis of $48.00.

Adım Adım Çözüm

1
Calculate pre-split total cost basis
$24,000 total cost basis
The total cost basis of the position is calculated by multiplying the initial number of shares by the initial price per share (400×$60.00=$24,000400 \times \$60.00 = \$24,000).
2
Calculate new share count after the split
500 shares
A 5-for-4 forward stock split increases total shares by a factor of 5/4 (400×1.25=500400 \times 1.25 = 500).
3
Calculate post-split per-share cost basis
$48.00 per share
Because stock splits do not alter the overall economic value or total cost basis of the investment, the per-share cost basis must be adjusted downward by dividing total cost basis by the new total shares ($24,000/500=$48.00\$24,000 / 500 = \$48.00).

Anahtar Kavram

Stock Split Cost Basis Adjustment
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Konular

Settlement Dates, Trade Confirmations, and Corporate Actions