Bad Brad Received 20 NQOs (Each Option Gives Him the Right

question 62

Multiple Choice

Bad Brad received 20 NQOs (each option gives him the right to purchase 30 shares of stock for $10 per share) from his employer. At the time he started working, the stock price was $11 per share. Now that the share price is $25 per share, he intends to exercise all of the options. Two years later Bad Brad sells the stock for $27 per share. What is Bad Brad's basis in his stock for purposes of calculating the gain or loss?

• A) $6,000.
• B) $9,000.
• C) $15,000.
• D) $16,200.

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Definitions:

Freezing Point

The temperature at which a liquid becomes solid.

Accumulator

A storage structure for pressurized brake fluid in many ABS systems and the Powermaster brake booster system.

Refrigeration System

A system designed to remove heat from an enclosed space or from a substance for the purpose of lowering its temperature and/or maintaining it below ambient level.

Receiver/Dryer

A component in a vehicle's air conditioning system that removes moisture from the refrigerant and acts as a storage tank for the refrigerant when the system is not in use.