Mega Computer issued stock with a face value of one cent and then sold the shares to the public for $20.00 each. Ted bought 10 shares at that price. Today, Ted sold his shares to David for $25.00 each. What are Ted's capital gains?
A) $19.99
B) $20.00
C) $25.00
D) $50.00
E) $0.01

Question

Quizplus · Accepted Answer

Ted's capital gains are calculated by subtracting his original purchase price from the sale price:

$25.00 - $20.00 = $5.00 per share

Since Ted bought 10 shares, his total capital gains are:

$5.00 x 10 = $50.00

Mega Computer Issued Stock with a Face Value of One