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
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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.
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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