Stock splitsPersonal Finance ProblemNathan Detroit owns

100

shares of Monster Beverage Corp., which he purchased for

$118

per share. Nathan read that the company's board of directors voted to split the stock

4-for-1.

Just before the stock split, Monster Beverage shares were trading for

$133.74.

Answer the following questions about the impact of the stock split on his holdings and taxes. Nathan is in the

22%

federal income tax bracket.

a.How many shares of Monster Beverage will Nathan own after the stock split?

b.

After

the split, what do you expect the price of Monster Beverage to be?

c.Compare the total of Nathan's holdings before and after the split. What do you find?

d.Does Nathan experience a gain or loss on the stock as a result of the

4-for-1

split?

e.What is Nathan's tax liability from the event?