Non-Graded
Quiz Number
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Source
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Question
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Answer
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1
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Ch43_MC01
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A short sale occurs when an investor does which of the following?
A: Buys a stock and uses it as collateral for a loan
B: Sells a stock at a loss
C: Borrows a stock and then sells it
D: Sells a stock for less than fair market value
E: None of the above
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Correct Answer C
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2
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Ch43_MC02
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A wash sale occurs when investors sell or trade stock or securities at a loss and acquire substantially identical stock or securities within how many days before or after the sale?
A: 15
B: 30
C: 60
D: 180
E: 365
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Correct Answer B
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3
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Ch43_MC03
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Investors are treated as having made a constructive sale of an appreciated financial position if they
A: Enter into a short sale of the same or substantially identical property
B: Enter into an offsetting notional principal contract relating to the same or substantially identical property
C: Enter into a futures or forward contract to deliver the same or substantially identical property
D: Acquire the same or substantially identical property (if the appreciated financial position is a short sale, an offsetting notional principal contract, or a futures or forward contract)
E: All of the above
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Correct Answer E
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4
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Ch43_MC04
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Which of the following is not qualified dividend income?
A: Procter & Gamble common stock dividends
B: Cohen & Steers Realty Shares (REIT) dividends
C: Microsoft common stock dividends
D: Fidelity Magellan Fund dividends
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Correct Answer B
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5
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Ch44_MC01
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Tax-efficient investment strategies include:
A: Adjusting for taxable and after-tax yields
B: Adjusting for capital gains taxes versus ordinary income taxes
C: Controlling the timing of recognition of gains and losses
D: Considering tax effects of mutual fund investing
E: All of the above are tax-efficient strategies
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Correct Answer E
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6
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Ch44_MC02
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Methods to defer capital gains taxes include all of the following EXCEPT:
A: Delay the sale of the asset
B: Like-kind exchange of tangible property
C: Installment sales
D: All of the above will delay capital gains
E: A and C will delay the capital gains, but B will not
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Correct Answer D
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7
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Ch44_MC03
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Jason is unhappy with the performance of his mutual fund. He sells his shares in the current fund and repurchases shares in a similar fund with the same firm. This transaction
A: Is not a taxable event since the two funds are similar
B: Is not a taxable event since the funds are with the same company
C: Is a taxable event
D: May not be a taxable event if the shares have been held for more than one year
E: May not be a taxable event if the managers of the two funds are different
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Correct Answer C
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8
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Ch44_AP04
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An investor deposited $5,000 into an account that earns 8% per year. The proportion of taxable gains is 90%, ordinary tax rate is 35%, the capital gains and dividends rate is 15%, and the built-in gain is zero. How much will the investor have at the end of 30 years?
A: $38,489
B: $40,732
C: $45,282
D: $46,544
E: $50,313
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Correct Answer B: ar = (g * r) + ((1 - to) * (1 - g) * r) = 0.9 * 0.08 + 0.65 * 0.10 * 0.08 = 0.072 + 0.0052 = 0.0772. And 1.077230 = 9.30873 making FV = 5,000 * [9.30873 – 0.15 * (0.9 * 0.08 * (9.30873 - 1)/0.0772 + 0)] = 5,000 * [9.30873 – 1.16236] = 5,000 * 8.14637 = $40,732.
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9
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Ch45_MC 01
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Qualified distributions for a Roth IRA that are tax-free include all of the following EXCEPT:
A: Distributions received after age 59 ½
B: Some first-time homeowners
C: Some distributions for college expenses
D: Distributions due to disability
E: All of the above are qualified distributions
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Correct Answer C
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10
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Ch45_MC 02
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Traditional IRAs produce better results than a Roth IRA if
A: Tax-equivalent contributions are the same and taxes remain constant
B: Tax-equivalent contributions are the same and taxes decrease after retirement
C: Tax-equivalent contributions are the same and taxes increase after retirement
D: The traditional IRA and Roth IRA will always produce the same results
E: The Roth IRA always produces better results than the traditional IRA
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Correct Answer B: Contributions to the Roth IRA are taxed when the contributions are made, but taxes are deferred until after retirement for the traditional IRA. If taxes decrease, and the contributions are tax-equivalent, the traditional IRA will produce better results.
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11
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Ch45_MC 03
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The retirement vehicle that will provide the highest after-tax return to an investor is
A: Fully tax deductible, fully tax deferred investment
B: Nondeductible, fully taxable investment
C: Nondeductible investment in an equity mutual fund
D: Taxed-deferred annuity
E: All of the above provide equivalent after-tax returns
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Correct Answer A
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12
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Ch45_MC 04
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Factors that influence the impact of the 10% early withdrawal penalty include all of the following EXCEPT:
A: Rate of return earned on the investment
B: Tax rates applicable to the distribution
C: Taxable amount
D: All of the above are relevant factors for the penalty impact
E: A and B are relevant factors, but C is not
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Correct Answer D
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