Assume You Buy Stock and Its Price Rises Just as Much

question 65

Multiple Choice

Assume you buy stock and its price rises just as much as the price level. Before taxes, what have you made?

• A) a nominal and real gain, but you pay taxes only on the nominal gain
• B) a nominal and real gain, but you pay taxes only on the real gain
• C) a nominal gain, but no real gain, yet you pay taxes on the nominal gain
• D) a nominal gain, but no real gain, so you pay no taxes on the nominal gain

---

Definitions:

Indefinite Term

A contract or agreement duration that lacks a specific end date, often continuing until one party gives notice of termination.

Sale-and-Lease-Back

A financial transaction where one sells an asset and immediately leases it back from the buyer, maintaining its use while freeing up capital.

Deductible Expense

An expense that can be subtracted from taxable income, reducing the total amount on which tax is assessed.

Lease Expiry

The date on which a lease agreement comes to an end.