Series 65: Unit 16 Quiz 2

A registered broker-dealer would not be able to open an account for A. two unrelated individuals. B. the CEO of a company whose stock is NYSE-traded. C. a person deemed mentally incompetent. D. the estate of a deceased individual.

A person deemed mentally incompetent

XYZ, Inc. is a C corporation in the 21% federal income tax bracket. Which of the following investments offers the company the highest after-tax return? A. Corporate bond with a 6.75% coupon B. ABCD, Inc. preferred stock paying a 6% dividend C. REIT paying a 6.5% dividend D. Municipal bond with a 5% coupon rate

ABCD, Inc. preferred stock paying a 6% dividend

When does a customer have to receive the OCC Options Disclosure Document? A. Within 5 business days of the first options trade B. Within 15 days of account approval C. With the confirmation of his first options transaction D. At or prior to the time the account is approved for options trading

At or prior to the time the account is approved for options trading

Mary Whiting has been a customer of yours for several years. Now that her oldest child is out of the house and living on his own, she wants to open a joint account with her son. If the account is opened tenants in common and Mary contributes 75% of the funding, it is correct to say that A. if Mary predeceases her child, her balance in the account passes to the child. B. both Mary and her child have an undivided interest in the account. C. when a security held in the account is sold, 75% of any cash disbursement is payable to Mary with the other 25% payable to the child. D. Mary decides which of the securities in the account are part of her 75% interest in the account.

Both Mary and her child have an undivided interest in the account

Which of the following vehicles make use of the unified estate tax credit? 1. Bypass trust 2. Generation-skipping trust 3. Living trust 4. Simple trust

Bypass trust and generation-skipping trust

Carmen Lobianco, who has been highly successful in business, has a thirty-year-old son. The son has been a quite a spendthrift. Lobianco is afraid the son will not be able to live within his means. To protect this from happening, Lobianco places $2,500,000 into a trust for the benefit of the son. To provide added safety, Lobianco arranges for the Amalgamated Bank and Trust Company to have total control over the assets. In this case, which of the following is not correct? A. Amalgamated Bank and Trust Company is the trustee. B. Carmen is the trustee. C. Carmen is the grantor. D. Carmen's son is the beneficiary.

Carmen is the trustee

Which of the following statements regarding an S corporation owner and an owner of an LLC are true? 1. Creditors have very limited recourse rights to the owners. 2. They may not be nonresident aliens. 3. They both are considered stockholders. 4. Both receive the tax benefit of owning flow-through entities.

Creditors have very limited recourse rights to the owners and both receive the tax benefit of owning flow-through entities

An investment constraint that is unique to private foundations is the requirement to A. have a board of directors. B. distribute 5% of its assets each year as qualifying distributions. C. have an investment policy statement. D. invest 5% of its assets each year in qualifying investments.

Distribute 5% of its assets each yr as qualifying distributions

Grandma has decided to give her grandson some stock that she bought many years ago. When the grandson sells the stock, how is the tax liability figured? A. Her date of purchase is used, but the cost basis is from the date of the gift. B. Her cost basis is used, but the holding period begins on the date of the gift. C. Her cost basis and date of purchase is used. D. Both the cost basis and holding period are determined from the date of the gift.

Her cost basis and date of purchase is used

The distributable net income (DNI) of a simple trust would not include A. interest received on municipal bonds. B. interest received on corporate bonds. C. reinvested capital gains. D. dividends received.

Reinvested capital gains

Limited liability is a characteristic of being an owner of 1. a general partnership 2. an interest in a limited partnership 3. shares of an S corporation 4. a sole proprietorship

An interest in a limited partnership and shares of an S corporation

Although all new accounts must be approved by a designated supervisor before any trading activity may take place, there is one type of account that must be approved by a specially qualified supervisor. That would be A. an IRA B. a margin account C. an options account D. a discretionary account

An options account

Which of the following are fiduciaries? 1. Executor of an estate 2. Administrator of a trust 3. Custodian of an UGMA account 4. Investment adviser representative granted with discretionary authority over the account

Executor of an estate, administrator of a trust, custodian of an UGMA account, and investment adviser representative granted w/ discretionary authority over the account

One of your clients runs a small business, currently organized as a sole proprietorship. Among the primary reasons why the client might consider changing to an LLC is A. limiting his personal liability. B. reducing paperwork. C. prestige. D. changing the due date of his tax filing.

Limiting his personal liability

Wade Kimmons purchased 200 shares of ABC common stock on March 9, 2009, paying $32 per share. Since the date of the purchase, Mr. Kimmons has received $518 in dividends. With the stock selling for $89 per share on July 27, 2016, Wade gives all 200 shares to his niece, Kendra. One week later, Kendra sells all of the ABC stock for $85 per share. The tax consequences of this are A. long-term capital gain of $11,118. B. long-term capital gain of $10,600. C. long-term capital loss of $800. D. short-term capital loss of $800.

Long-term capital gain of $10,600

A client is completing a new account form that contains questions about the investor's investing experience and knowledge. More than likely, what type of account is being opened? A. Discretionary B. Options C. Retirement D. Margin

Options

If a client wishes the assets in her account to pass directly to specific beneficiaries after her death, her account should be titled A. TIC. B. testamentary account. C. TOD. D. JTWROS.

TOD

Which type of individual account allows for investments held in that account to go straight to a named beneficiary outside of probate? A. TOD account B. Account titled JTWROS C. Testamentary account D. Advisory account

TOD account

Mr. Peabody Fawcett and his sister, Ms. Gwenyth Paige-Newberry open a brokerage account at your firm with an initial deposit of $11 million. The account is opened as tenancy in common (TIC) with Peabody owning 40% and Gwenyth the balance. Several years later, Peabody is fatally injured while playing polo. As a result A. Mr. Fawcett's share will be transferred to his sister and an individual account will be opened in her name B. the account will be frozen until the results of the probate court are released C. the account will be frozen until receiving instructions from the executor of Mr. Fawcett's account D. 40% of the value of the account will be transferred to an estate account in his name and 60% will be transferred into an individual account in her name

40% of the value of the account will be transferred to an estate account in his name and 60% will be transferred into an individual account in her name

One of your existing clients wishes to open a new account in the name of his spouse and enter orders on her behalf. A. This action is prohibited unless the customer signs a trading authorization on behalf of his spouse. B. This practice is ordinary and acceptable. C. The agent could be liable if the stock declines in value. D. This action is prohibited unless the spouse signs a trading authorization.

This action is prohibited unless the spouse signs a trading authorization

Oscar and Hilda, a married couple, are collecting Social Security. They speak to their financial planner for advice on taxation of those benefits. At what level do their benefits become subject to income tax?​ A. When 50% of their benefits added to all their other income, excluding tax-exempt interest, exceeds $25,000 B. When 50% of their benefits added to all their other income, including tax-exempt interest, exceeds $25,000 C. When 50% of their benefits added to all their other income, excluding tax-exempt interest, exceeds $32,000 D. When 50% of their benefits added to all their other income, including tax-exempt interest, exceeds $32,000

When 50% of their benefits added to all their other income, including tax-exempt interest, exceeds $32k