Mary Watson Bought 20 Shares of Stock Two Years Ago

question 81

Multiple Choice

Mary Watson bought 20 shares of stock two years ago.She recently sold her stock making a profit of $1,400.Long-term capital gain rates are 15% for her income level.She is in the 22% tax bracket.Her tax on this investment is:

• A)$98.
• B)$210.
• C)$308.
• D)$392.
• E)$0.

---

Definitions:

Premium

The amount paid for a product or service beyond its intrinsic value, often due to insurance, quality, or demand factors.

Profit

The financial gain achieved when the revenues generated from an activity exceed the expenses, costs, and taxes associated with that activity.

Striking Price

The price at which the holder of an option can buy (in case of a call option) or sell (in case of a put option) the underlying security when the option is exercised.

Stock Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a stock at a specified price within a specified time period.