A Capital Gain Occurs When an Asset Has Been Held

question 36

Multiple Choice

A capital gain occurs when an asset has been held for

• A) more than six months.
• B) less than six months.
• C) any length of time.
• D) more than one year.

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Definitions:

Marginal Cost

The additional cost incurred by producing and selling one more unit.

Fixed-Cost Fallacy

Consideration of costs that do not vary with the consequences of your decision (also known as the sunk-cost fallacy).

Depreciation Costs

The allocation of the cost of a tangible asset over its useful life, representing the decline in value due to wear and tear, age, or obsolescence.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to pursue a particular action.