On January 15 of the current year, Henry sold stock with a basis of $7,000 to his grandson Isaac for $4,000, its fair market value on that date. On December 30 of the current year, Isaac sold the same stock for $8,000 to a friend in a bona fide, arms-length transaction. As a result of these transactions, A. Isaac has a recognized gain of $4,000. B. Isaac has a recognized gain of $1,000. C. Henry has a recognized loss of $3,000. D. Neither Henry nor Isaac has a recognized gain or loss.

The answer should be b.

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan