A Home with a Cost Basis of $40,800 in 2005

question 6

Multiple Choice

A home with a cost basis of $40,800 in 2005 is resold today for $90,000. Commissions and closing expenses are $6,300. What is the gain on the sale?

• A) $6,300
• B) $42,900
• C) $83,700
• D) $82,600

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Definitions:

Secondary Market

The financial market where investors buy and sell securities they already own, as opposed to the primary market where securities are first issued.

Intrinsic Value

The inherent worth of a company, stock, currency, or product determined through fundamental analysis without reference to its market value.

Stock Price

The current price at which a share of a company is bought or sold in the market.

EPS

Earnings Per Share (EPS) is a financial ratio calculated by dividing the profit attributable to common shareholders by the average outstanding common shares, indicating the company's profitability on a per-share basis.