Six Years Ago, HOPCO Granted Mr

question 16

Multiple Choice

Six years ago, HOPCO granted Mr. Sing a nonqualified option to purchase 1,000 shares of HOPCO stock at $55 per share. On date of grant, the market price was $50 per share. This year, Mr. Sing exercised the option when the market price was $64 per share. How much ordinary income does Mr. Sing recognize because of the exercise?

• A) $0
• B) $5,000
• C) $9,000
• D) $14,000

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Definitions:

Strong Electrolyte

A substance that completely dissociates into ions in solution, conducting electricity efficiently.

Electrolyte

A material that, when dissolved in a polar solvent like water, yields a solution capable of conducting electricity.

Compound

A substance made up of two or more different elements that are chemically bonded together.

Total Ionic Equation

An equation that shows all the soluble ionic substances in a chemical reaction as they exist as ions in a solution.