On January 31 of the Current Year,Sophia Pays $1,000 for an Option

question 2

Multiple Choice

On January 31 of the current year,Sophia pays $1,000 for an option to acquire 100 shares of Texas Corporation common stock for $105 per share at any time prior to December 31.As of December 31,Sophia had not exercised the option or sold it.Which of the following statements is correct?

• A)Sophia may recognize a $1,000 STCL.
• B)Sophia may recognize a $1,000 LTCL.
• C)Sophia may recognize a $1,000 ordinary income.
• D)Sophia may not recognize a loss.

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Definitions:

Negative Reinforcement

A process in behavioral psychology where the removal of an unpleasant stimulus strengthens or increases the probability of a response.

Conditioned Taste Aversion

The learned avoidance of a certain food or drink because it has been associated with an unpleasant or aversive experience.

Higher-Order Conditioning

A form of conditioning where a stimulus is paired with a previously conditioned stimulus, leading to a response even without the presence of the original, unconditioned stimulus.

Stimulus Substitution

A concept in conditioning where a neutral stimulus becomes associated with a meaningful stimulus and acquires the capacity to elicit a similar response.