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Stock splits Personal Finance Problem Nathan Detroit owns 300 shares of the food company General Mills, Inc., which he purchased during the recession in January
Stock splits Personal Finance Problem Nathan Detroit owns 300 shares of the food company General Mills, Inc., which he purchased during the recession in January 2009 for $41 per share. General Mills is regarded as a relatively safe company because it provides a basic product that consumers need in good and bad economic mes. Nathan read in he ars ee Jouma hat he or any sboa o rectors ad voted to split the stock 2-for-1. In June 2010, just before the stock split, General Mills shares were trading for $74.00 Answer the following questions about the impact of the stock split on his holdings and taxes. Nathan is in the 30% federal income tax bracket. a. How many shares of General Mills will Nathan own after the stock split? b. Immediately after the split, what do you expect the value of General Mills to be? c. Compare the total value of Nathan's stock 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 2-for-1 split? e. What is Nathan's tax liability from the event? a. The number of shares of General Mills Nathan will own after the 2-for-1 split is |6001 shares. (Round to the nearest whole number) b. The value of General Mills immediately after the 2-for-1 split is $74 per share. (Round to the nearest cent.) . The current value of Nathan's stock holdings before the split is $61.50 (Round to the nearest dollar.) The total value of Nathan's stock holdings after the a 2-for-1 split is $1 (Round to the nearest dollar) A stock split will d. Nathan experiences e. What is Nathan's tax liability from the event? (Select the best answer below.) V the total value of Nathan's stock holdings. (Select from the drop-down menu.) on the stock as a result of the 2-for-1 split. (Select from the drop-down menu.)
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