Soledad Received One Stock Right for Every Two Shares of Stock

question 50

Multiple Choice

Soledad received one stock right for every two shares of stock she owned.She owned 100 shares that she purchased two years ago for $1,000.Each of the 50 rights that she received allows her to purchase one share of stock for $15.The stock is currently selling for $22 per share.What is her basis in the 50 stock rights?

• A)$0
• B)$137.25
• C)$159.09
• D)$274.51

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Definitions:

Perfectly Competitive

A market structure where many firms sell identical products, entry and exit are easy, and no single seller can influence the market price.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Total Revenue

The total amount of income generated by the sale of goods or services before any expenses are subtracted.

Nash Equilibrium

A situation in game theory where each player’s strategy is optimal given the strategies of all other players, resulting in a stable outcome.