Bob purchases 25,000 shares of common stock of Super Duper for $100,000. Exactly one year later when the stock is selling for $5 per share, Bob sells 5,000 shares for $25,000 and holds on to the remaining 20,000 shares. Which of the following statements is correct? a.) Bob has a realized capital gain of $4,000 and an unrealized capital gain of $1,000. b.)Bob has a realized capital gain of $5,000 and an unrealized capital gain of $20,000. c.)Bob has a $25,000 realized capital gain. d.)Bob has a $5,000 unrealized capital gain.
Bob purchases 25,000 shares of common stock of Super Duper for $100,000. Exactly one year later when the stock is selling for $5 per share, Bob sells 5,000 shares for $25,000 and holds on to the remaining 20,000 shares. Which of the following statements is correct? a.) Bob has a realized capital gain of $4,000 and an unrealized capital gain of $1,000. b.)Bob has a realized capital gain of $5,000 and an unrealized capital gain of $20,000. c.)Bob has a $25,000 realized capital gain. d.)Bob has a $5,000 unrealized capital gain.
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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Bob purchases 25,000 shares of common stock of Super Duper for $100,000. Exactly one year later when the stock is selling for $5 per share, Bob sells 5,000 shares for $25,000 and holds on to the remaining 20,000 shares. Which of the following statements is correct?
a.) Bob has a realized capital gain of $4,000 and an unrealized capital gain of $1,000.
b.)Bob has a realized capital gain of $5,000 and an unrealized capital gain of $20,000.
c.)Bob has a $25,000 realized capital gain.
d.)Bob has a $5,000 unrealized capital gain.
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