Question
In: Accounting
4. Bernice buys shares of stock in ABC Corporation for $400,000. She sells the stock to...
4. Bernice buys shares of stock in ABC Corporation for $400,000. She sells the stock to her daughter, Henrietta, for $300,000. How much loss did Bernice realize on the sale? How much loss did Bernice recognize? Henrietta sells the stock two years after receiving it. What are Henrietta’s realized and recognized gains/losses if Henrietta sells the stock for $100,000, $250,000 or $600,000? If you were going to submit an argument to Congress to change these rules, what would your best argument be?
Solutions
Expert Solution
Bernice
Purchase Price $400000
Sale price $300000
Loss $100000
Recognize Loss $100000
Henrietta
Sale price $100000 $250000 $600000
Purchase Price $300000 $300000 $300000
(Loss) /profit ($200000) ($ 50000) $300000
Recognise loss/profit ($200000) ($ 50000) $300000
ekkarill92 answered 1 year agoRelated Solutions
Filer Mining Corporation has eight million shares of common stock outstanding, 400,000 shares of 4 percent...
Filer Mining Corporation has eight million shares of
common stock outstanding, 400,000 shares of 4 percent preferred
stock outstanding, and 150,000 7 percent semiannual bonds
outstanding, par value $1,000 each. The common stock currently
sells for $45 per share and has a beta of 0.90, the preferred stock
currently sells for $70 per share, and the bonds have 15 years to
maturity and sell for 90 percent of par. The market risk premium is
9 percent, the risk-free rate is...
Joe sells his shares in BHP and buys shares in a tech stock company. Are these...
Joe sells his shares in BHP and buys shares in a tech stock
company. Are these primary or secondary market transactions?
Explain why.
In what way is the existence of well-developed secondary
markets important to the functioning of the primary markets within
the financial
system? (Marks
2 + 2 =4)
Distinguish between a coupon security and a discount security.
Give an example of
each. (Marks
2)
Riley and Bailey are planning to start a new business together.
They are expecting annual taxable...
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one
of those shares each year for the next 3 years. His actions and the
price history of the stock are summarized below. The stock pays no
dividends.
Time
Price
Action
0
$
140
Buy 3 shares
1
150
Sell 1 share
2
150
Sell 1 share
3
150
Sell 1 share
a. Calculate the time-weighted geometric
average return on this portfolio. (Do not
round intermediate calculations. Round your...
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one
of those shares each year for the next 3 years. His actions and the
price history of the stock are summarized below. The stock pays no
dividends.
Time
Price
Action
0
$
125
Buy 3 shares
1
145
Sell 1 share
2
145
Sell 1 share
3
145
Sell 1 share
a. Calculate the time-weighted geometric
average return on this portfolio. (Do not
round intermediate calculations. Round your...
A manager buys three shares of stock today, and then sells one of those shares each...
A manager buys three shares of stock today, and then sells one
of those shares each year for the next 3 years. His actions and the
price history of the stock are summarized below. The stock pays no
dividends.
Time
Price
Action
0
$
120
Buy 3 shares
1
150
Sell 1 share
2
150
Sell 1 share
3
150
Sell 1 share
a. Calculate the time-weighted geometric
average return on this portfolio. (Do not
round intermediate calculations. Round your...
Mr. Suphi buys 100 shares of ABC stock on margin. The share price is $50 and...
Mr. Suphi buys 100 shares of ABC stock on margin. The share
price is $50 and the initial margin is 50%. What is the maintenance
margin on the account if the margin call is triggered at a share
price of $35? Ignore the interest on the loan.
b) Mr. Suphi buys 200 shares of EFG stock on margin. The share
price is $60 and the initial margin is 50%. What is Mr. Suphi’s
rate of return on equity if he...
Slow Food has 400,000 shares of common stock outstanding. The common stock currently sells for $70...
Slow Food has 400,000 shares of common stock outstanding. The
common stock currently sells for $70 per share. It is expected that
common stock will pay $3 dividend next year and its growth rate is
4 percent.
Fresh Food Company has 550,000 shares; 4% preferred stock
outstanding. Preferred stock is currently sold at $95 per share and
flotation (selling) cost is $2.
Fresh Food has 160,000 of 10 percent annual interest bonds
outstanding, price is 95% of the par value...
An investor buys shares in a stock. She puts up $10,000 but borrows an equal amount...
An investor buys shares in a stock. She puts up $10,000 but
borrows an equal amount
of money from her broker to double the amount invested to
$20,000. The stock costs
$10 per share when she purchases it. In one year the investor
sells all her shares of
the stock for $8 per share. The broker charged 5% (per year) on
the loan. Also, right
before the investor sold her shares, the stock paid a dividend
of $2.25 per share....
Que : Mary buys and sells ladies' handbags. She buys for cash and sells on one...
Que : Mary buys and sells ladies' handbags. She buys for cash
and sells on one month's credit. She pays £20 for each bag and
sells them for £35 each. During March, her first month of trading,
she bought 50 handbags for cash and had 10 handbags remaining in
inventory at the month end. Ignoring any other expenses or
payments, which of the following statements is true for
March?
Select one:
a. The business made a gross profit for the...
Investor buys 200 shares of stock at $27.25 per share. Investor sells the stock after one...
Investor buys 200 shares of stock at $27.25 per share. Investor
sells the stock after one year. 1. What is the dollar amount of
gain and the percent of return if the stock is sold for $32.60 per
share? How much does the yield percentage increase to if the stock
received a per share dividend of $1.15 during the year? 2. What is
the dollar amount of loss and percentage of return if the stock
received a per share dividend...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- More and more adults are considering commuting to work by bicycle rather than car, but few...
- Please answer these questions Data Processing and Analysis using python. Thank you In statistics, an outlier...
- Write a function file that accepts each of the four vectors as inputs. The function file...
- Kant says that to act morally is to act out of duty. How does this differ...
- Suppose you are trying to determine the capacity (in gallons) of the gas tank needed on...
- List the arithmetic operators used in BASIC and state their priorities of execution in a statement....
- Describe the espoused values of a company you have worked for (or been exposed to -...
ADVERTISEMENT