An investor purchases an ABC Corporation convertible bond at 98 on June 18, 1997. The bond is convertible at $25 and the investor converts his bond into the stock on June 19, 1998, when the common stock is trading at $26 per share. For tax purposes, these transactions will result in:
A) a $60 capital gainz.
B) neither gain nor loss.
C) a $40 capital loss.
D) a $40 capital gain.
Answer: B) neither gain nor loss.