Question 1

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B : a penalty of 10% of the withdrawn amount is assessed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 2

Level III of NASDAQ provides which of the following?

Options :

A : representative quotations

B : firm quotation

C : subject markets

D : workout markets

Answer: B

Question 3

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 4

Bubba plans to borrow some money and pledge securities as collateral. Which of the following can he not use as collateral?

Options :

A : Series EE bonds

B : US treasury bills

C : US treasury notes

D : US treasury bonds

Answer: A

Question 5

Convertible preferred stock has all of the following characteristics except:

Options :

A : a lower dividend rate than non-convertible preferred

B : a dilution of earnings if converted into common stock

C : a requirement for shareholders to always accept the call price when called

D : required dividend payments to shareholders before any dividends are paid to holders of common stock

Answer: C

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