Gina Owns 100 Shares of XYZ Common Stock with a $12,000

question 49

Essay

Gina owns 100 shares of XYZ common stock with a $12,000 basis and a $25,000 FMV.She receives 100 stock rights with a total FMV of $15,000.Answer the following:
a.What is the basis of the 100 shares of stock?
b.What is the basis of the 100 stock rights?

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Definitions:

Day Trading

The practice of buying and selling financial instruments within the same trading day, taking advantage of small price movements.

Arbitrageur

An investor who attempts to profit from price inefficiencies in different markets by simultaneously buying and selling equivalent assets.

Severe Decline

A significant drop in value, performance, or condition, often used in the context of markets or economic indicators.