Maren Received 10 NQOs (Each Option Gives Her the Right

question 60

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 39.6 percent?

• A) $0 gain and $0 tax.
• B) $500 gain and $100 tax.
• C) $500 gain and $175 tax.
• D) $1,200 gain and $180 tax.

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Definitions:

Logistic Regression

A statistical method for analyzing datasets in which there are one or more independent variables that determine an outcome, which is dichotomous.

Multiple Logistic Regression

A statistical technique that models the probability of a certain outcome or event based on more than one independent variable.

Explanatory Variables

Variables in a statistical model that are believed to explain or influence changes in a response variable.

Standard Deviation

A measure of the dispersion or variability within a set of data points, indicating how spread out the values are from the mean.