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Assume You have purchased 125 shares each at BD45 per share
Assume You have purchased 125 shares each at BD45 per share. You will sell the stock when its market price is doubled. If you expect the stock price to increase 30% per year, how long will you wait to sell the stock?
Select one:
a. 4.48YEARS
b. 5 YEARS
c. 2.6 YEARS
d. 3,5 YEARS
Expert Solution
Option (d), 3,5 years because if only 30% of the total stock value get increased in one yera then it will near about 3,4 years to get dubbled.
If you sell a stock security too soon after purchasing it, you may commit a trading violation. The U.S securities and exchange comission (SEC) called this violation as "free-riding".
A wash sale rule prohibits sells an investment for a loss and replacing it with the same or a " Substantially identical" Investment 30 days before or after the sale .
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