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Finra Exam SIE Topic 4 Question 8 Discussion

Actual exam question for Finra's SIE exam
Question #: 8
Topic #: 4
[All SIE Questions]

A customer purchased 100 shares of Company XYZ common stock five years ago for $20.00 per share. Over the life of her investment, the customer received cash dividends of $2.00 per share, on which she paid total income taxes of $0.50 per share. She recently sold the stock for $30.00 per share. What is the customer's cost basis in each share of XYZ stock?

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Suggested Answer: A

The cost basis of a stock represents the purchase price and does not include dividends received. Taxes paid on dividends also do not affect the cost basis.

Original purchase price per share = $20.00.

Dividends and taxes on dividends do not adjust the stock's cost basis.

A is correct because the cost basis remains $20.00.

B, C, and D incorrectly assume that dividends or taxes change the cost basis.


by Toi at Mar 21, 2025, 10:34 PM

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Vonda
24 days ago
I'm going with D) $30.00. Why? Because I'm feeling rebellious and want to stick it to the system. Plus, the question says she 'recently sold the stock for $30.00 per share,' so that must be the cost basis, right? Right?
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German
27 days ago
I think the cost basis is $22.00, considering the dividends and taxes as well as the selling price.
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Colene
1 months ago
I believe the cost basis is $21.50, taking into account the dividends received and taxes paid.
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Mona
1 months ago
Seriously, guys? It's not that hard. The answer is B) $21.50. If you can't figure that out, you might want to consider a different career path. Maybe professional cat herder would be a better fit.
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Mila
9 hours ago
C) $22.00
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Keneth
3 days ago
B) $21.50
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Shawnda
13 days ago
A) $20.00
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Johana
1 months ago
Easy peasy! The answer is clearly B) $21.50. You just need to do the simple math - original cost minus taxes plus dividends. This is a piece of cake compared to some of the other questions on this exam.
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Vi
1 months ago
I agree with Lindsey, it should be $20.00 because that's what she originally paid per share.
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Boris
1 months ago
Hmm, I'm not sure about this one. The dividends and taxes are a bit confusing. I'll go with C) $22.00 just to be safe.
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Alba
8 hours ago
C: I'm going with $22.00, just to be safe.
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Gerald
2 days ago
B: I believe it's $21.50 because of the dividends and taxes.
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Tonja
13 days ago
A: I think the cost basis is $20.00.
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Lindsey
1 months ago
I think the cost basis is $20.00.
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Juan
1 months ago
I think the answer is B) $21.50. The customer paid $20.00 per share, received $2.00 per share in dividends, and paid $0.50 per share in taxes, so the cost basis should be $20.00 - $0.50 + $2.00 = $21.50 per share.
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Brent
14 days ago
So, the customer's cost basis per share is $21.50.
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Anabel
29 days ago
That makes sense. The cost basis is calculated by subtracting taxes paid and adding dividends received.
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Bettina
1 months ago
I think the answer is B) $21.50.
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