Maren Received 10 NQOs (Each Option Gives Her the Right

question 109

Multiple Choice

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. How much gain will Maren recognize on the sale of the shares and how much tax will she pay assuming her marginal tax rate is 37 percent?

• A)$0 gain and $0 tax
• B)$500 gain and $100 tax
• C)$500 gain and $185 tax
• D)$1,200 gain and $240 tax

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Definitions:

Primary Appraisal

The initial evaluation process where an individual assesses the significance of a stressor to determine its potential impact.

Secondary Appraisal

The cognitive process involved in evaluating the potential impact of a stressor and determining how to cope with it.

Exhaustion Stage

The final phase of the stress response, where the body has depleted its energy resources by continually trying but failing to recover from stress.

General Adaptation Syndrome

A model that describes the body's response to stress in three stages: alarm, resistance, and exhaustion.