This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 62, 65, 66, and 82. –ANSWER POSTED– Continue reading
This month’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66 and Series 82):
The decimal equivalent of a basis point is:
Answers:
A. 0.01
B. 0.001
C. 0.0001
D. 0.00125
Correct Answer: C. 0.0001
Rationale: A basis point is one-hundredth of one percent, or .0001.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This month’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 62, 65, and 66. –ANSWER POSTED– Continue reading
This month’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 62, Series 65, and Series 66):
Your client owns stock mutual funds in an account with automatic reinvestment of dividends and capital gains. What happens to the value of his account on ex-dividend dates?
Answers:
A. The value of the account shrinks by the amount of the distribution
B. The value of the account grows by the amount of the distribution, and it is a taxable event for him
C. The value of the account remains unchanged, and it is a taxable event for him
D. The value of the account remains unchanged, and it is not a taxable event for him
Correct Answer: C. The value of the account remains unchanged, and it is a taxable event for him
Rationale: Upon distribution and reinvestment of dividends or capital gains, the client ends up with more shares, and each share is worth slightly less. The value of the account is unchanged. The mutual fund company reports these distributions annually to the IRS, and they are treated as taxable income.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, 24, 62, 65, 79, 82, and 99. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 7, Series 24, Series 62, Series 65, Series 79, Series 82, and Series 99):
To qualify as a REIT, a company must do all of the following EXCEPT:
Answers:
A. Invest at least 75% of its assets into real estate or cash
B. Distribute at least 90% of its taxable income to shareholders annually in the form of dividends
C. Have a minimum of 100 shareholders after its first year of operation, and no more than 50% of its shares may be held by five or fewer individuals during the last half of any taxable year
D. Derive at least 90% of its gross income from its real estate sources
Correct Answer: D. Derive at least 90% of its gross income from its real estate sources
Rationale: A Real Estate Investment Trust is a company that owns and operates income-producing real estate, such as office buildings, apartments, malls, hotels and resorts. They differ from other real estate companies in that they are required to operate the properties they develop after they have built them, rather than selling them off. Most REITs specialize in a single type of real estate.
To qualify as a REIT, it must:
By annually distributing at least 90% of taxable income to shareholders, REIT income is not taxed at the entity level. This is huge benefit to the REIT. However, because this income has never been taxed, dividend distributions to shareholders are not considered “qualified dividends,“ instead REIT dividends are generally taxed as ordinary income at the investor’s top marginal rate.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, and Series 99. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, and Series 99):
A client wants to open a custodial IRA account for his minor daughter who has earned a couple thousand dollars babysitting. Which of the following would be the best choice?
Answers:
A. Traditional IRA
B. Roth IRA
C. SIMPLE IRA
D. SEP IRA
Correct Answer: B. Roth IRA
Rationale: SEP and Simple IRAs are for small businesses. A traditional IRA would work but since the client’s daughter doesn’t have enough income to take advantage of the tax deduction benefit from a traditional IRA, the Roth IRA is the best choice since it will permit her to eventually withdraw tax-free.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 65, and 66. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 65, and Series 66):
The IRS uses the FIFO method for taxing:
Answers:
A. Withdrawals from a life insurance contract
B. Withdrawals in excess of the basis in a variable annuity contract
C. Loans from a life insurance contract
D. None of the choices listed
Correct Answer: A. Withdrawals from a life insurance contract
Rationale: Life insurance enjoys “first in, first out“ treatment from the IRS. Annuities are taxed on a LIFO basis, and money borrowed from a life insurance contract is not taxed at all.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
“The material and website were very well organized and thorough. I felt I was prepared for the actual, real test…” Continue reading
“The material and website were very well organized and thorough. I felt I was prepared for the actual, real test when I took it because I had gone through their range of questions with all the practice tests that I could do on their website, covering every topic, approached with different angles.”
– Stacey Sperry, Durham, NC
Read more reviews here: Solomon Exam Prep Reviews
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, 7, 62, 65, 66, and 82. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 62, Series 65, Series 66, and Series 82):
Ross receives 50 shares of ABC Co. as a gift, then later inherits an additional 50 shares of ABC Co. The shares were all originally purchased at $10/share. When Ross receives the shares as a gift, they are worth $20/share. When Ross inherits the shares, they are worth $30/share. When Ross eventually all sells the shares, they are worth $50/share. What is Ross’s total cost basis when he sells the shares?
Answers:
A. $1,000
B. $2,000
C. $2,500
D. $5,000
Correct Answer: B. $2,000
Rationale: Inherited shares received a stepped up cost basis based on their market value at the time of the prior owner’s death. Shares received as a gift maintain their original cost basis. So the cost basis of the inherited shares is $1,500 ($30/share * 50 shares) while the cost basis of the gifted shares is $500 ($10/share * 50 shares). Adding them together gives a total cost basis of $2,000.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 52, and Series 65. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 7, Series 52, and Series 65):
Jenny lives in Minnesota. She is comparing a Washington state municipal bond that pays 5% to similar corporate bonds. She has a federal tax rate of 20% and a State rate of 4%. What yield will the corporate bond have to pay to be equivalent to the municipal bond?
Answers:
A. 4%
B. 5%
C. 6.25%
D. 6.58%
Correct Answer: C. 6.25%
Rationale: Because Jenny lives in Minnesota, the interest on her municipal bond will be tax-exempt at the federal level, but not at the state level. To calculate the tax-equivalent yield of a municipal bond, simply take the rate of the municipal bond and divide it by 1 minus the tax rate. So the tax equivalent yield = .05/(1-.20) = .0625 or 6.25%.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
This is a short video overview of what you need to know about qualified dividends for securities licensing exams. Continue reading
This is a short video overview of what you need to know about qualified dividends for securities licensing exams.
To order exam prep materials please head to our main website http://solomonexamprep.com or give us a call at 503.601.0212.
This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 52, Series 62, Series 65, and Series 66. –ANSWER POSTED– Continue reading
This week’s study question from the Solomon Online Exam Simulator question database is now available.
Question (Relevant to the Series 6, Series 7, Series 52, Series 62, Series 65, and Series 66):
Concerning municipal bonds issued by the city of Baltimore, Maryland:
Answers:
A. If you live in the state of Maryland, you will pay state tax on the interest you earn
B. If you live in the state of Virginia, you will not pay state tax on the interest you earn
C. If you live in the state of Maryland, you will pay federal capital gains tax on any profits you realize when you sell the bonds
D. If you live in the state of Virginia, you will not pay federal capital gains tax on any profits you realize when you sell the bonds
Correct Answer: C. If you live in the state of Maryland, you will pay federal capital gains tax on any profits you realize when you sell the bonds
Rationale: Interest income earned on municipal bonds is not taxable at the federal level, and only taxable at the state level outside the state of their issuance. Capital gains realized upon the sale of such bonds are subject to capital gains tax regardless of the taxpayer’s state of residence.
Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.
