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Question 1

Securities may be sold under SEC rule 144 provided that the following conditions are met:

Options :

A : the company files regular financial data with the SEC

B : they are sold in agency transactions only

C : they are sold in principal transactions only

D : both A and B

Answer: A

Question 2

The expiration date of a listed option is:

Options :

A : the last day of the expiration month

B : the third Saturday of the expiration month

C : the Saturday following the third Friday of the expiration month

D : the third Friday of the expiration month

Answer: C

Question 3

Which of the following best describes phantom income?

Options :

A : income from deductions and tax credits

B : the non-taxable portion of a distribution

C : income received but not reported

D : income reported but not received

Answer: D

Question 4

Bubba is age 54 and has investments in a retirement plan with his former employer valued

at $104,500. Bubba withdraws $25,000 to open a retail clothing store.

Which of the following statements is true regarding Bubba’s tax consequences?

Options :

A : the entire account is terminated and $104,500 is immediately taxable

B : a penalty of 10% of the withdrawn amount is assessed

C : a penalty of 10% on all assets in Bubba’s account is assessed

Answer: B

Question 5

A dealer buys 100 shares of XYZ common, which is an actively traded stock, at 23.50.

Three days later, when XYZ common is quoted at 19.50 - 19.75, he sells the 100 shares to a customer. The basis for the dealer’s markup is:

Options :

A : 10 5/8

B : 19 7/8

C : 23 1/2

D : 5?ove cost

Answer: B