Section 3 11/20
A Schedule K-1 would be received by an individual with an ownership interest in all of the following except A) a C corporation. B) a partnership. C) an S corporation. D) an LLC.
A
Which of the following would an investor who believes in MPT probably select for a client? A) JKL, with a return of 15% and a standard deviation of 15 B) GHI, with a return of 13% and a standard deviation of 20 C) DEF, with a return of 13% and a standard deviation of 18 D) ABC, with a return of 11% and a standard deviation of 15
A
If a businessowner's goal is to establish an entity that features ease in raising capital, which of these entities is the most appropriate? A) A sole proprietorship B) An S form of corporation C) A limited liability company (LLC) D) A general partnership
C
The real interest rate of a fixed income investment is A) interest earned adjusted for the investment's premium or discount price B) the coupon interest payment C) the interest earned after inflation D) interest earned after taxes
C
Which of the following could reduce the amount that an individual may contribute to a Traditional IRA? I. Roth IRA contributions made for the year II. High income level III. Participation in an employer-sponsored plan IV. Marital status
I only
When performing a capital needs analysis for a client, factors to be considered would include I. the client's projected earnings II. the projected inflation rate III. projected market volatility IV. the client's age
I, II, & IV
A grantor retained annuity trust (GRAT)would not be used to reduce I. estate taxes. II. gift taxes. III. income taxes.
III only
True or False regarding capital gains taxation? If an investor holds stock for 12 months or less and has no other transactions, any gain on the sale of the stock is taxed at the same rate as ordinary income.
True
A customer's limit order to buy 500 shares of QRS at 60 is executed and the agent reports the trade execution to the customer. One hour later, the customer notices that QRS is down 2 points and informs the agent that he no longer wants the stock and is not planning to pay for it. The agent should tell the customer that A) he owns the stock and must submit payment B) the firm will repurchase the securities from the customer for the price paid C) he personally will repurchase the securities from the customer for the price paid D) he may sell the stock at the purchase price in the open market
A
Your client is the sole beneficiary of her late father's IRA, which is valued at $500,000. The client indicates that she has no need for the money and would rather it go to her children. To accomplish this, she would have to A) disclaim the IRA B) skip the IRA C) refuse the IRA D) reject the IRA
A
A client bought 100 shares of a mutual fund on December 28, 2016, for $4,000 and received a capital gains distribution of $2.40 per share on March 6, 2017, which was taken in cash. He sold his 100 shares for $4,300 on June 19, 2017. For tax purposes, this transaction resulted in A) a $240 long-term capital gain and a $60 short-term capital gain. B) a $300 short-term capital gain. C) a $240 long-term capital gain. D) a $60 short-term capital gain.
B
It is agreed by most investment advisers that diversifying an investment portfolio can reduce the overall risk. Benefits of diversification would include all of the following except A) increasing risk-adjusted returns. B) lowering trading costs. C) lowering the volatility of the portfolio. D) mitigating the effects of a bankruptcy of a security held in the portfolio.
B
