5 years ago you purchased 10 shares of ABBLE stock for $10 a share, today you can sell each share for $25. Ignoring all commissions, what would be the capital gain on the sale? $1,500 $150 $15 $100
5 years ago you purchased 10 shares of ABBLE stock for $10 a share, today you can sell each share for $25. Ignoring all commissions, what would be the capital gain on the sale? $1,500 $150 $15 $100
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Five years ago, you purchased 10 shares of ABBLE stock for $10 a share. Today, you can sell each share for $25. Ignoring all commissions, what would be the capital gain on the sale?
- $1,500
- $150
- $15
- $100
This question is designed to test your knowledge of calculating capital gains on stocks.
To find the capital gain, use the following steps:
1. **Calculate the Initial Investment:**
- Number of shares purchased = 10
- Purchase price per share = $10
- Total initial investment = 10 shares × $10 = $100
2. **Calculate the Total Sale Proceeds:**
- Sale price per share = $25
- Total sale proceeds = 10 shares × $25 = $250
3. **Calculate the Capital Gain:**
- Capital gain = Total sale proceeds - Total initial investment
- Capital gain = $250 - $100 = $150
Therefore, the correct answer is $150.
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