enomonie Publishing stock currently sells for $40 per share. The company has 1,200,000 shares outstanding. What would be the effect on the existing cost basis of an investor's holdings immediately following the declaration and payment of a 20% stock dividend?

The cost basis will rise by 20%

The cost basis will decline by 16.67%

The cost basis will decline by 20%

The cost basis will decline by 83.33%

The cost basis will be unaffected by the transaction.