Assume That the Colemans in the Preceding Problem Instead Sold

question 80

Multiple Choice

Assume that the Colemans in the preceding problem instead sold their home on December 1, 2012, for $800,000. How much gain must the Colemans recognize?

• A) $425,000
• B) $291,667
• C) $133,333
• D) $-0-
• E) None of the above

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Definitions:

Credit Risk

The risk that the bond will not make all of its promised payments; default risk.

Swap Market

A market in which individuals, businesses, and institutions exchange financial instruments, like interest rates or currencies.

Fixed Rate

An interest rate that remains constant over the life of a loan or investment.

Portfolio's Beta

A measurement of the volatility or systematic risk of a portfolio in comparison to the market as a whole.