According to the lock-in effect,individuals may:

Question

Quizplus · Accepted Answer

The lock-in effect refers to the tendency of individuals to delay selling an asset in order to avoid paying taxes on the capital gain. By delaying the sale, individuals can minimize the present discounted value of the tax payment. Therefore, option B correctly explains this effect. Option A is incorrect because it suggests that individuals would sell their assets too quickly, which is not consistent with the lock-in effect. Option C is incorrect because the heirs would still have to pay taxes on the capital gains, regardless of when the assets were sold. Option D is incorrect because leaving cash rather than assets may not necessarily minimize tax complications.

According to the Lock-In Effect,individuals May