Question

How does the disposition effect impact​ investors' tax​ obligations?

​(Select the best choice​ below.)

A.

The disposition effect causes investors to sell stocks that have appreciated and hold onto stocks that have depreciated. Thus investors are saving on capital gains taxes that they could defer and deferring tax deductions they could take immediately. Because of the time value of​ money, these investors are therefore increasing their required tax obligations.

B.

The disposition effect causes investors to sell stocks that have appreciated and hold onto stocks that have depreciated. Thus investors are paying capital gains taxes that they could defer and deferring tax deductions they could take immediately. Because of the time value of​ money, these investors are therefore increasing their required tax obligations.

C.

The disposition effect causes investors to sell stocks that have appreciated and hold onto stocks that have depreciated. Thus investors are paying capital gains taxes that they could defer and deferring tax deductions they could take immediately. Because of the time value of​ money, these investors are therefore decreasing their required tax obligations.

D.

The disposition effect causes investors to buy stocks that have appreciated and hold onto stocks that have depreciated. Thus investors are paying capital gains taxes that they could defer and deferring tax deductions they could take immediately. Because of the time value of​ money, these investors are therefore increasing their required tax obligations.

Answer 1

B.

The disposition effect causes investors to sell stocks that have appreciated and hold onto stocks that have depreciated. Thus investors are paying capital gains taxes that they could defer and deferring tax deductions they could take immediately. Because of the time value of​ money, these investors are therefore increasing their required tax obligations

the above is answer..

because under this you are paying more taxes in present value terms by not taking the benefit of deduction