Chloe Owns 200 Shares of TPP Stock That She Purchased

question 55

Multiple Choice

Chloe owns 200 shares of TPP stock that she purchased 10 years ago for $1,500.Five years ago, there was a 3 for 2 stock split and she received 100 additional shares.This year, there was another 3 for 2 stock split and she received 150 additional shares.If the stock is currently selling for $10 per share, how much income does she recognize and what is her basis in these last 150 shares?

• A)$3,000 income; $3,000 basis
• B)$3,000 income, $1,125 basis
• C)0 income; $1,125 basis
• D)0 income; $500 basis

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Definitions:

Marginal Costs

The boost in total charges incurred by producing one more unit of a product or service.

Rational Self-interest

Acting in a way that is most beneficial to oneself, based on logical and reasoned decision-making.

Utility

In economics, the satisfaction or benefit derived from consuming a product or service.

Opportunities

Circumstances that make it possible to do something, often leading to new ventures or investments in economics.