Thanks to everyone who took Investor Clinic's year-end money and investing quiz.

Today, based on your requests, I'll be explaining some of the more challenging questions. If you haven't taken the quiz yet, you can find it here.

On Jan. 5, 2017, Justin buys 200 shares of Kantmiss Gold Mines Corp. at \$75 each. If he decides to sell 100 shares on Dec. 29, when the stock is trading at \$3.40, he can report a capital loss of _____ to offset his 2017 capital gains (ignore commissions).

a. \$14,320

b. \$7,160

c. \$3,580

d. zero

Some readers calculated the difference between Justin's purchase and sale prices and multiplied it by 100 to arrive at answer c) \$7,160. That would have been correct, except for one key detail: Justin sold the shares on Dec. 29, which means the transaction would settle two business days later, on Jan. 3, 2018 – too late to be included in the 2017 tax year. For the loss to count in 2017, Justin would have had to sell the shares no later than Dec. 27. The correct answer is therefore d) zero.

Question No. 5 also tripped up some readers:

Angela buys 400 shares of Bill's Bait Inc. at \$20 a share. She sells 100 shares at \$25 a share. She then buys 200 shares at \$27 a share. Ignoring commissions, what is the adjusted cost base per share, for tax purposes, of her 500 shares?

a. \$20.33

b. \$21.80

c. \$22.80

d. \$22.33

The important thing to remember here is that, when you sell a portion of your shares, the average cost per share of your remaining shares does not change. Angela paid \$20 a share, or \$8,000 in total, for her original 400 shares. When she sells 100 shares – regardless of the sale price – the average cost of her remaining 300 shares is still \$20 a share, or \$6,000 in total. If she then buys 200 shares for \$27 each, or \$5,400, her total cost rises to \$11,400. Divide that by 500 to arrive at the correct answer c) \$22.80.

Next up, question No. 6:

While reviewing his portfolio, Santa Claus noticed that his investments – largely in marijuana and liquor stocks – had gained 73 per cent over the past five years. Assuming no money was withdrawn or added to his portfolio in that time, what was Santa's compound annual rate of return?

a. 14.6 per cent

b. 12.9 per cent

c. 11.6 per cent

d. 10.2 per cent

If an investment appreciates by 73 per cent, it is worth 1.73 times its initial value. To calculate the compound annual rate of return over a five-year period, you would need to find a number that, when raised to the power of five, equals 1.73. I used an online calculator to find the fifth root of 1.73, which is 1.116. The annual rate of return is therefore 11.6 per cent.

Some readers fell for my trap in question No. 9:

Virginia holds 100 shares of McDonald's Corp. in her tax-free savings account. If McDonald's pays a quarterly dividend of \$1.01 (U.S.) a share, how much will Virginia receive if her broker converts U.S. cash at an exchange rate of 78 cents (U.S.) per \$1 (Canadian)?

If you hold U.S. shares in an RRSP, RRIF or other retirement account, under the Canada-U.S. tax treaty, no tax will be withheld on the dividend. However, because a tax-free savings account is not strictly a retirement account, U.S. dividends are subject to a 15-per-cent withholding tax. Virginia would therefore receive 85 per cent of \$101 (U.S.), or \$85.85, which, when converted to Canadian dollars by dividing by 0.78, works out to answer c) \$110.06 (Canadian).

Question No. 11 also dealt with U.S. dividends:

In a non-registered account, Beatrice bought 100 shares of a U.S. stock for \$65 (U.S.) when the Canadian dollar was trading at 95 cents (U.S.). If she sells the shares for \$85 (U.S.) when the loonie is at 78 cents (U.S.), her capital gain would be:

To determine a capital gain (or loss) on U.S. shares, you need to determine both the cost and proceeds in Canadian dollars using the exchange rate that was in effect for each transaction. Beatrice's cost was \$6,500 (U.S.)/0.95 (U.S.), or \$6,842.11 (Canadian). Her proceeds were \$8,500 (U.S.)/0.78 (U.S.), or \$10,897.43 (Canadian). Her capital gain was therefore \$10,897.43 minus \$6,842.11, which is c) \$4,055.32 (Canadian)

Finally, we'll look at question No. 14.

On Dec. 1, 2017, Mrs. Claus withdraws \$5,000 from her tax-free savings account to buy food for her reindeer. On Jan. 1, 2018, she withdraws another \$3,000 for sleigh repairs. Assuming she maxed out her TFSA contributions every year from 2009 through 2017 and made no other withdrawals, how much can she contribute to her TFSA as of Jan. 2, 2018?

a. \$5,500

b. \$8,500

c. \$10,500

d. \$13,500

When you make a TFSA withdrawal, the amount is added back to your contribution room – but not until Jan. 1 of the following year. So the \$3,000 withdrawal that Mrs. Claus made on the first day of 2018 won't be included in her contribution room until 2019. That means her maximum contribution as of Jan. 2 would be the \$5,500 contribution limit for 2018 plus the \$5,000 she withdrew in 2017, which is c) \$10,500.

It wasn’t long ago that investing in private companies was the domain of venture capital firms and the wealthiest of investors. Now, average high net-worth individuals are buying in as well.