An investor's portfolio currently is worth $2 million. During the year, the investor sells 500 shares of Tesla at a price of $200 per share and 3,000 shares of Google at a price of $100 per share. The proceeds are used to buy 1,000 shares of Amazon at $500 per share. a. What was the portfolio turnover rate? b. If the shares in Tesla originally were purchased for $180 each and those in Google were purchased for $80, and the investor's tax rate on capital gains income is 20%, how much extra will the investor owe on this year's taxes as a result of these transactions?

An investor's portfolio currently is worth $2 million. During the year, the investor sells 500 shares of Tesla at a price of $200 per share and 3,000 shares of Google at a price of $100 per share. The proceeds are used to buy 1,000 shares of Amazon at $500 per share. a. What was the portfolio turnover rate? b. If the shares in Tesla originally were purchased for $180 each and those in Google were purchased for $80, and the investor's tax rate on capital gains income is 20%, how much extra will the investor owe on this year's taxes as a result of these transactions?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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