Helen holds 500 shares of Fizbo Inc. stock that she purchased 11 months ago. The...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Helen holds 500 shares of Fizbo Inc. stock that she purchased 11 months ago. The stock has done very well and has appreciated $58/share since Helen bought the stock. When sold, the stock will be taxed at capital gains rates (the long-term rate is 15 percent and the short-term rate is the taxpayers marginal tax rate). Ignore the time value of money.
a. If Helens marginal tax rate is 35 percent, how much would she save by holding the stock an additional month before selling?
Tax Savings_______
b. What might prevent Helen from waiting to sell?
Helen Bears
additional risk
no risk
if she holds the stock
for an additional month
the stock price could
increase
decrease
substantially if
there is market volatility
or if the company
encounters financial
difficulties. In
addition, Helen
may be selling the stock
to generate cash flow
to prevent cash flow
for which she may
be unwilling to wait.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
