Question
Sandra recently purchased 145 shares of a company for $10150 ($70 per share). The company has been doing well. Given the success of the company,
Sandra recently purchased 145 shares of a company for $10150 ($70 per share). The company has been doing well. Given the success of the company, her shares are now worth $200 each. This year, she received a dividend of $1015, which she reinvested to purchase 5 shares of stock in the company. How does Sandras decision to reinvest her dividend (buy more stock) affect her total basis in the investment?
a) Sandras total basis invested increased from $10150 to $11165.
b) Sandras total basis increased from 145 shares to 150 shares.
c) Sandras total basis decreased to $9135 and then increased back to $10150.
d) Sandras total basis is not affected by reinvesting her dividends.
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