Consider the following information. How many shares do you hold today if you bought 1,000 shares of this stock at the beginning of 1985?
1986 - 10 percent stock dividend
1987 - 10 percent stock dividend
1988 - 25 percent stock dividend
1989 - 100 percent stock dividend
1994 - 2-for-1 stock split
2007 - 100 percent stock dividend.
Here is the computation:
Year Event Shares Issued Balance Computation
1985 1,000.00 Given
This solution illustrates the effect of stock dividends and splits on an investor's stock holdings.