Have to show work! Corey pays 15% in dividend and capital gains taxes and 35% in

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Have to show work!

Corey pays 15% in dividend and capital gains taxes and 35% in ordinary income taxes. Four years ago, she invested $500,000 in a private placement offering with some friends. The initial price was $50 a share. The investment group is now discussing the possibility of publicly selling their shares. One of the members of the group believes they could get at least $75 a share. If this is correct, what are Corey’s taxes when she sells her shares (ignoring commissions and fees)? A: $0 because the group is not allowed to sell their private placement shares to the public B: $37,500 C: $54,000 D: $70,000 E: $87,500

16- Assume that the futures price of gold is $390 a troy ounce, and the contract is for 100 troy ounces. The initial margin is $2,000. If the future price increases by 5.0%, what is the return to the investor? A: 1.0% B: 2.5% C: 5.0% D: 19.5% E: 97.5%

17- Iris pays 15% in dividends and capital gains taxes and 35% in ordinary income taxes. Several years ago, she purchased a Mortgage-Backed Security (MBS) for $20,000 which was the par value of the underlying assets. At the end of this year, she received a statement stating she had received $700 in scheduled amortization of principal, $1,200 in interest, and $500 in unscheduled collection of principal. What is Iris’s after-tax cash flow this year from this investment? A: $1,560 B: $1,695 C: $1,980 D: $2,040 E: $2,400

18- Three years ago, Charles purchased a $1,000 face value 10-year Treasury note for par. The market value of this bond is now $950. If Charles sells the bond today, the tax implications of sale are A: $50 loss against ordinary income B: $50 capital gain C: $50 capital loss D: $50 gain against ordinary income E: No tax effects since Treasury securities are exempt from taxes

Explanation / Answer

8- Three years ago, Charles purchased a $1,000 face value 10-year Treasury note for par. The market value of this bond is now $950. If Charles sells the bond today, the tax implications of sale are A: $50 loss against ordinary income B: $50 capital gain C: $50 capital loss D: $50 gain against ordinary income E: No tax effects since Treasury securities are exempt from taxes

E: No tax effects since Treasury securities are exempt from taxes

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