Which of the Following Statements About the Individual Capital Gains

question 78

Multiple Choice

Which of the following statements about the individual capital gains and losses is false?

• A) Gain on sale of Section 1231 depreciable real property is taxed at a 25% maximum rate.
• B) Short-term capital gains are taxed as ordinary income.
• C) Capital losses are deductible only against capital gains.
• D) Nondeductible capital losses are carried forward for deduction against future capital gains.

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Definitions:

Capital Asset Pricing Model (CAPM)

Equation of the Security Market Line showing the relationship between expected return and beta.

Reward To Risk Ratio

A measure that evaluates the anticipated gains from an investment against the level of risk assumed to achieve these gains.

Security Market Line

A graphical representation of the expected return of all risky marketable securities as a function of their beta, or systemic risk, according to the capital asset pricing model.

Diversifiable Risk

Relates to the risk that can be reduced or eliminated from a portfolio by holding a variety of investments.