If a Nontaxable Stock Dividend Is Received and Is Not

question 35

Multiple Choice

If a nontaxable stock dividend is received and is not the same type of stock as that owned before the dividend,the original stock's basis is allocated to all shares

• A)based on the par value of the stock.
• B)equally to all shares owned after the stock dividend.
• C)based on relative fair market values at the time of the stock dividend.
• D)none of the above.

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Definitions:

S&P/TSX Composite Index

A market index representing the performance of the Canadian stock market, compiled by the Standard & Poor’s company.

Diversifiable Risks

Risks associated with individual investments that can be reduced or eliminated through portfolio diversification.

Individual Firm

An independently owned and operated company that is limited in size and in revenue depending on the industry.

Industry

Refers to a group of companies that are related based on their primary business activities.