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Dissecting and Answering the Sample Story Questions

Generally, story questions involve several sentences, most of which are not relevant to the actual question being asked. Usually, only one or two of the sentences is important in arriving at an answer for the test item. Frequently, the actual test point or question is near the end of the long question. The actual test question, or test item, in the five story questions are as follows:

Question 1: The question is asking you about the offer of one-half of the commission to Paul. It does not refer to Bill's offer or attempt to sell the insurance. In short form, the entire question could be asked as:

An offer by an insurance agent of one-half of the commission to a prospect as part of a sales presentation is an example of what?

Question 2: The question is asking you to identify the penalty involved for an excess contribution to the IRA. Again, the test item could have been worded as follows:

How much is the penalty for an excess IRA contribution?

Question 3: The question is, what will be the price of the new bond as it relates to the decreased interest rate. It could have been worded simply as follows:

When interest rates decrease, what happens to the price of a bond?

Question 4: Obviously, the actual question is, what will Jack's gift tax liability be? However, the sentence that states that each grandchild will receive a gift of $25,000 is important, since this figure tells you the size of the gift from which the gift tax will be computed. The question could have been worded:

If a donor gives $25,000 to a grandchild, how much of this amount is subject to federal gift tax?

Question 5: The question is, basically, what alternatives does Mary have with regard to the expense incurred by a nursing home confinement. The test item could have been stated simply as follows:

What financial resources may be available to pay for nursing home expenses?

Story problems are not difficult -- if you can blow away the smoke and find the fire.