S66 Section 3

A technical analyst who wishes to smooth out the fluctuations of stock market prices would probably chart A) the 100-day moving average B) the support and resistance levels C) the trendlines D) the short interest

A

Jane and Malka are discussing the possible form of efficient markets. Jane states that, "A weak form price-efficient market is one in which security prices fully reflect past share price and trading volume data." Malka retorts that she is not sure of Jane's thoughts and says, "If markets are weak form efficient, we cannot consistently outperform the market based on technical analysis." A) Both Jane and Malka are correct. B) Jane is correct, but Malka is incorrect. C) Both are incorrect. D) Malka is correct, but Jane is incorrect.

A

A customer opens a margin account with a broker-dealer and signs a loan consent agreement. The loan consent agreement allows the firm to A) commingle the customer's securities with securities owned by the firm B) loan out the customer's margin securities C) lend the customer money D) hypothecate securities in the account

B

Ebony sets up a revocable trust, naming her daughter, Sylvia, as the sole beneficiary. Ebony has appointed the Pacific Atlantic Trust Institution (PATI) as the trustee. Any income to the trust will be taxable to A) the trust. B) the beneficiary. C) the grantor. D) the trustee.

C

Investment company portfolio managers are apt to classify common stocks into groups. One measurement is the product of multiplying the market price per share times the number of shares outstanding. The result is known as A) market value B) debt-to-equity ratio C) market capitalization D) total value

C

When saving money for a child's college education, one consideration is the impact that those savings will have on the child's eligibility for financial aid. Funds saved in which of the following vehicles has the most detrimental effect on financial aid? A) Prepaid tuition plan B) Coverdell ESA C) UTMA D) Section 529

C

A married couple has lived in the same home for 40 years and now, with the children all gone, they've decided to sell and move to a retirement village. They purchased the home for $80,000 and have accepted a contract for $800,000. The tax consequence of this sale is A) a $470,000 capital gain. B) a $720,000 capital gain. C) a $0 capital gain. D) a $220,000 capital gain.

D

An individual purchased a variable life insurance policy 10 years ago with a guaranteed death benefit of $100,000. The annual premium for this policy was $2,000 per year. The individual dies and, due to outstanding performance of the separate account, leaves a death benefit to the beneficiary of $121,000. What are the income tax consequences to that beneficiary? A) There is a long-term capital gain of $1,000. B) Ordinary income tax is due on the $1,000 that exceeds the original cost. C) Ordinary income tax is due on $21,000. D) No tax is due.

D

An investment strategy where a higher price is paid for a stock based on expected returns is A) return on investment. B) dollar cost averaging C) futures investing D) growth investing

D

Which of the following statements regarding participant loans in a 401(k) plan are correct? I. The maximum allowable loan amount is the lesser of $50,000 or 50% of the participant's vested account balance. II. Unless the loan is taken out for the purpose of a mortgage on the participant's principal residence, repayment must be completed within 60 months of obtaining the loan. III. Payback of the loan will be through payroll deduction. IV. Default on the loan will result in the IRS treating the loan as a distribution.

I, II, III, & IV