On January 10, 2017, Wally Sold an Option for $2,000

question 3

Essay

On January 10, 2017, Wally sold an option for $2,000 on vacant land he held as an investment. He had purchased the land in 2013 for $76,000. The option allowed the option holder to purchase the property for $122,000 plus the cost of the option. On March 1, 2017, the option holder exercised the option. What is the amount and nature of Wally's gain or loss from disposition of the land?

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Definitions:

CFA

CFA stands for Chartered Financial Analyst, a professional designation given by the CFA Institute that measures the competence and integrity of financial analysts.

Financial Analysts Federation

An organization that represents the interests and professional development of financial analysts.

Money Management

The process of budgeting, saving, investing, spending, or overseeing the capital usage of an individual or group.

Earning Power

The ability of a company to generate profit from its operations over time.