Odette bought 1000 shares of Oran Co.at $60 per share and 100 shares of Gitane Co.at $40 per share.Both shares are now worth $50 per share.Both companies have offered to repurchase their shares.If Odette would like to have about $5000 in cash, should she sell the Oran or Gitane?

Question

Quizplus · Accepted Answer

If Odette wants to have about $5000 in cash, she needs to sell some of her shares. Both of her investments have decreased in value, so selling either one will result in a loss. However, selling Oran would be the better choice because a tax deduction on the loss will leave her with more than $5000, while taxes on the capital gain from Gitane would leave her with less than $5000. Therefore, Option A is the best choice.

Odette Bought 1000 Shares of Oran Co