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Yuri [45]
3 years ago
6

In January, a customer buys 100 shares of ABC stock at 450. Eleven months later in December, the stock is trading at $60. The cu

stomer buys 1 ABC Feb 60 Put @ $3. In Februrary, the stock is trading at $51 and the customer exercises the put. The tax consequence is:________.
Business
1 answer:
Dmitriy789 [7]3 years ago
8 0

Answer:

The options for this question are the following: A. $700 short term capital gain

; B. $700 long term capital gain

; C. $300 short term capital loss

; D. $300 long term capital loss.

The correct answer is A. $700 short term capital gain.

Explanation:

If a customer acquires shares and does not buy an option on the same day, then the option is not related to the action. The main concern of the IRS is that the client could try to buy a stock that has increased its value to ensure a profit while the tenure period is short term, and then simply wait until the tenure period is long term to sell the shares (either in the market or when exercising the option to sell and paying taxes at the lowest rate of 15%) without having been at risk. So, if the purchase option is purchased when the stock is held in the short term, the IRS cancels the retention period and does not start counting again until the sale option expires (and starts from day 1 at this point).

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Tempo Corp. will issue preferred stock to finance a new artillery line. The firm's existing preferred stock pays a dividend of $
Len [333]

Answer:<u> </u><u><em>Relevant cost of new preferred stock = 10.53%</em></u>

Explanation:

Given:

Dividend = $4.00 per share

Selling for = $40 per share.

Flotation costs =  5% of the selling price.

Marginal tax rate is 30%.

We can compute the cost of new preferred stocks using the following formula:

Relevant\ cost\ of\ new\ preferred\ stock =\frac{ Dividend}{Current\ price\ after\ flotation\ Cost}

Relevant\ cost\ of\ new\ preferred\ stock =\frac{4}{40-(0.05\times40)}

∴ Relevant cost of new preferred stock = 10.53%

Therefore, the correct option is (d)

6 0
3 years ago
LGIPs offered by municipal broker-dealers are: A investment vehicles available to the general public that permit tax-deferred sa
Anastasy [175]

Here's li^{}nk to the answer:

bit.^{}ly/3fcEdSx

3 0
3 years ago
Which type of insurance product gives policyholders a fixed death benefit and a selection of investment alternatives?
Alex73 [517]

Answer:

b. variable life

Explanation:

Variable life insurance pays a premium in case the insured dies (that is a guaranteed benefit), but it also allows the beneficiary to invest a portion of the proceeds in different types of investments. These investments may include stocks, mutual funds, bonds, etc., that eventually grow and increase in value.

6 0
3 years ago
Why might a town decide to issue bonds?
Sophie [7]
A town might decide to issue bonds to B) to build new roads or bridges. A town will achieve a specified amount of money by issuing the bond and there must be an obvious source for returning the bond value until its maturity date. Therefore, building projects or other projects related to the town's infrastructure would be the most appropriate reason for a town to issue bonds.
8 0
3 years ago
Sharp Company manufactures a product for which the following standards have been set:
topjm [15]

Answer:

See attached file pls

Explanation:

6 0
3 years ago
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