Quiz 2

A stock dividend changes the overall value of the portfolio *

True

False

The cost basis of shares is reduced after a stock dividend *

True

False

A stock dividend is taxable in the year it’s paid *

True

False

If a cash dividend remains the same, the current yield on the stock will increase after a stock dividend is paid *

True

False

As it relates to cost basis and capital events, which is TRUE? *

Cost basis is equal to the amount paid for a security less commissions

The sale of a security held for more than one year results in a long-term capital gain or loss

The holding period of a security is measured from trade date to trade date

Any amount of the original investment received by an investor is considered a return of capital

A security has a 6% Rate of return, when the inflation rate is 1.5% and T-Bills are yielding 2%

What is the real return? *

4%

4.5%

5%

5.5%

A security has a 6% Rate of return, when the inflation rate is 1.5% and T-Bills are yielding 2%

What is the risk-adjusted return? *

4%

4.5%

5%

5.5%

A 12b-1 Fee is an annual fee charged against fund assets to finance advertising expenses *

True

False

A no-load fund cannot include a 12b-1 Fee *

True

False

A redemption fee is an additional sales charge assessed on certain sales *

True

False

As it relates to college savings plans, which is true? *

Local government investment pools are investments for municipal entities

A prepaid tuition plan allows individuals to decide how their money is invested

A 529 plan allows investors to front load the plan with five years' worth of contributions

A 529 ABLE account permits a disabled person to continue receiving Medicare payments

Which is true regarding limited partnership investments? *

Partnerships may require limited partners to deposit additional funds

Investors are not required to receive information regarding the risks of the investment

Registered representatives can use discretion to purchase limited partnerships for customers

Customers must provide their RRs with written approval to purchase limited partnership interests

Which of these is TRUE with regards to options trading? *

The OCC issues and guarantees all contracts and deals directly with broker-dealers, not customers

Trade settlement between broker-dealers and the OCC is the same business day

Equity options expire at 11:59 pm ET on the third Friday of the expiration month

Index options provide the opportunity to hedge against the movement of the market, rather than movement of a specific stock

MM SIE Exam Prep