Question On August8, 2007, ZZ, Inc. purchased 5,000 shares of EZ Company stock f

Question

Question

On August8, 2007, ZZ, Inc. purchased 5,000 shares of EZ Company stock for$18 per share. The

followinginformation relates to the EZ Company stock:

? EZCompany paid a dividend of $2 per share on October 1, 2007

? The EZCompany stock was valued at $15 per share on December 31, 2007

? ZZ, Inc.sold 3,000 shares of the EZ Company stock for $22 per share on May18, 2008

? EZCompany paid a dividend of $2 per share on October 1, 2008

? The EZCompany stock was valued at $19 per share on December 31, 2008

Question

Explanation / Answer

purchase of the 5000 shares is at $18 per share : there was a realized gain of 12000 on the sale of 3000 shareson May 18 2008 : we now have 2000 shares remaining @ 18 /share : so our unrealized gain is 2000 @ (19-18)=$1=$2000

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