A bby buys a position in a closed-end mutual fund that is selling

| June 13, 2016

Abby buys a position in a closed-end mutual fund that is selling at an 8% discount. The fund earns 12%, but the discount decreases to 5%. What is Abby’s return on this investment?

A. 8.5%B. 12.0 %
C. 12.4D. 14.2%
E. 15.7%

Stella pays 15% in dividend and capital gains taxes and 35% in ordinary income taxes. In 1990, she paid $1,000 for three American Eagle $50 gold coins (1 oz gold) and $340 for one coin in December 2003. In july 2004, she sold all four coins to net $460 each.What is the after-tax cash flow from this investment?

A. $150
B. $247
C. $401
D. $425
E. $500

A 6.4% preferred stock has a par value of $30 and is currently selling in the market at $40. The quarterly dividend for this stock is

A. $0.16
B. $0.48
C. $ 0.64
D. $1.92
E. $ 2.56

A portfolio of treasury bonds with coupon payment dates of February 15 and August 15 that matures in 10 years may be stripped into how many zero-coupon bonds?

A. 0 since treasury securities and not eligible for stripping
B. 1
C. 10
D. 11
E 21

Jason is in the 28% federal income tax bracket and 7% New York state income tax. He has invested in New York State bonds that yield a 6% return. The taxable equivalent yield on this bond is

A. 6.45%
B. 7.32%
C. 8.54%
D. 9.23%
E. 10.61%

Joe Purchased 10, 000 shares of IBM several years ago for $60. Joe died yesterday. The closing price of IBM was $90. The basis of this stock for federal estate tax purposes is

A. $ 0
B. $30,000
C. $45,000
D. $ 60,000
E. $90,000

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