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?

A$20.00

B$21.50

C$22.00

D$30.00

Show Suggested Answer

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

13 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

16 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

19 days ago

I believe the cost basis is $21.50, taking into account the dividends received and taxes paid.

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Mona

19 days 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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Shawnda

2 days ago

A) $20.00

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Johana

21 days 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

24 days ago

I agree with Lindsey, it should be $20.00 because that's what she originally paid per share.

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Boris

25 days 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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Tonja

2 days ago

A: I think the cost basis is $20.00.

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Lindsey

29 days 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

3 days ago

So, the customer's cost basis per share is $21.50.

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Anabel

18 days ago

That makes sense. The cost basis is calculated by subtracting taxes paid and adding dividends received.

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Bettina

24 days ago

I think the answer is B) $21.50.

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