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klemol [59]
3 years ago
9

An individual acquired 500 shares of stock on December 20, year 1, for a personal portfolio. On March 15, year 2, the individual

executed a short sale of 500 shares of the stock. On December 21, year 2, the individual delivered the 500 shares to cover the short sale. Which of the following statements best characterizes the gain or loss on the short sale?
1 The transaction will be treated as ordinary income because of the March short sale.
2 The transaction will be treated as a long-term capital asset sale.
3 The transaction will be treated as a 40% short-term/60% long-term capital asset sale.
4 The transaction will be treated as a short-term capital asset sale.
Business
1 answer:
ziro4ka [17]3 years ago
8 0

Answer:

4) The transaction will be treated as a short-term capital asset sale.

Explanation:

This person engaged in a short sale, which is classified as a short term capital asset sale since the holding period was shorter than 1 year (March 15 - December 21).

A short sale takes place when an investor sells property that he either doesn't own, or owns but doesn't want to sell. This sale is done in two steps:

  1. the investor borrows the stock and delivers it to the buyer
  2. the investor later purchases the same stock (hopefully at a lower cost) and returns them to the lender

The investor cannot realize any gain or loss until he/she actually returns the stocks to the lender. If the investor managed to buy the stocks at a lower price, he/she will have realized a capital gain.

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Answer:

point-of-purchase advertising.

Explanation:

In this scenario, Brad is contacting each of his grocery and convenience accounts with an opportunity to install an end-of-aisle display with graphics of the Super Bowl teams and a display of several varieties of chips.

Hence, this is known as point-of-purchase advertising, a type of trade-oriented promotion.

A point of purchase advertising can be defined as a marketing strategy used by retailers, which typically involves the placement of end user goods e.g graphics of the Super Bowl teams strategically placed in a supermarket aisle for retail customers.

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Allowing third-party sellers to list their products on Amazon is controversial. Why would Amazon allow products sold by others t
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Answer:

<u>e. All of the above.</u>

Explanation:

Interestingly, all the above-listed options could serve as a possible reason why Amazon allows products sold by others to appear on its site.

<em>Remember, </em>Amazon is a marketplace;<em> </em>since the definition of a market involves dealings with several entities, it thus logical to expect Amazon to allow people (other sellers) to transact on its platform.

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The Nite Lite Factory produces two products - small lamps and desk lamps. It has two separate departments - finishing and produc
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Answer:

$11.1

Explanation:

We can calculate the factory overhead allocated to a unit using multiple department factory overhead rate methods with an allocation base of direct labor hours. In this method, we will divide the te total overhead cost in direct labor hours consumed in that department.

Solution

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Direct Labor  Overhead  rate for Finishing = $1.10  per hour

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Overhead for DeskLamps = (Direct labor hours in Finishing x Direct Labor  Overhead  rate for Finishing + Direct Labor hours in Production x Direct Labor  Overhead rate for Production)

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Overhead for DeskLamps= $11.1

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Answer:

The bond that should pay the highest interest rate is:

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This is based on the fact that the new restaurant chain is untested, has higher risk profile and the bondholders are assuming higher risks, and the bond cannot be compared to the bonds issued by the US government, New York State, and General Motors, in that order.  The new restaurant chain will be offering a higher rate of return than others because it is new to the bond market and would like to attract potential bond investors.   Without the higher rate, therefore, it will not be successful in the bond issuance.

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