Justin Invested $5,000 in Stock A

question 50

Multiple Choice

Justin invested $5,000 in Stock A. Although it did not pay any dividends, Stock A appreciated in value and Justin earned a 50% return on this investment in one year"s time. He sold the
Stock and invested his net proceeds in Stock B. Stock B returned 25% during the year, and
Justin sold the stock, considering himself smart because he discovered that Stock A had
Returned only 20% during this second year. If the capital gains tax rate is 15%, how much did
Justin gain (or lose) by following this strategy?

• A)gain of $226
• B)gain of $1,256
• C)loss of $1,031
• D)loss of $94