CFP Study Material
under which of the following qualified plans are loans prohibited
IRA
which of the following statements about annuities is false
a corporation can be an anniutant
which of the following statements about annuities is false
a corporation can be an annuitant
which of the following is a unique benefit that is associated with annuities and no other investment
a guaranteed income that cannot be outlived
a special security that allows the owner to sell 100 shares of stock at a specified price within a specified time
a put option
the period during which the contract owner contributes premiums towards an annuity is known as the
accumulation period
the period during which the contract owner distributes premiums towards an annuity is known as the
accumulation period
which is not a factor that contributes to the relative safety of annuities as investments
all annuities are insured by the FDIC
a 1035 exchange
allows an annuity contract owner to exchange one annuity for another on a tax free basis if certain conditions are met
which of the following is taxed only when a stock is sold
any capital gain
a guaranteed minimum income benefit
assures the owner of a certain level of lifetime payments at annuitization, regardless of the performance of the separate account
an equipment leasing program requires investors to be at risk for
atleast 20% of the purchase price of the leased equipment
the market price of a stock is determined by
buying and selling shares among investors
which is not a characteristic of IRA
can be opened by anyone regardless of age
how many capital losses be used to offset ordinary income
capital losses may be used to offset capital gains plus up to 3000 of ordinary income for dollar
most dividends on stock are paid in the form of
cash
the type of insurance that covers the risk of legal liability
casualty insurance
an example of demand deposit account
checking account
which type of investment offers a fixed number of shares for sale
close end
which of the following is not a characteristic of Roth IRA
contributions may be tax deductible
which of the following is not a feature of a qualified retirement plan
employers and employees can make unlimited contributions to the plan each year
the type of annuity that provides investors with both account guarantees and the potential for stock market return is
equity indexed annuity
death benefits are provided only for insurance policies, not annuities
false
the type of annuity that guarantees investors a specific rate of interest and that invests premiums into the insurers general account
fixed annuity
if a contract owner makes a withdraw from a deferred annuity before the annuity starting date, the owner must
follow the interest out first rule for tax purposes
which of the following might provide an investor with income that is exempt from federal tax
general obligation bonds
the individual income tax rates are
higher at some income levels
the type of annuity in which the phase out period begins one payment interval after the premium is paid
immediate annuity
the type of annuity in which the phaseout period begins one payment interval after the premium is made
immediate annuity
the alternate minimum tax must be paid when
it is greater than the original amount of regular tax due
which of the following statements about variable annuities is false
it is the insurance company, not the contract owner that assumes the investment risks associated with a variable annuity
the annuity payout option in which payments are made to 2 people, but only until the first one dies is a
joint life annuity
the annuity payout option in which payments are made to 2 people, but only until the first one dies
joint-life annuity
bonds that have a rating of BB or lower are known as
junk bonds
a qualified retirement plan for a self employed person is known as
keogh plan
which of the following is the most devastating effect of inflation
loss of purchasing power
the price for which a stock can be bought or sold
market value
in a limited partnership arrangement, the liability of the limited partner for the company's obligations is
no more than the amount of the original investment
the interest rate stated on a bond is its
normal yield
which of the following statements about annuities is false
one advantage of annuities is that annuity values must pass through the contract owners probate estate
which of the following provisions allows an investor to exchange one annuity for another with no tax liability
section 1035 of the Internal Revenue Code
a bond with a face value of 1000.00 is selling for 1250.00
selling at a premium
at age 66, wanda took a lump sum distribution from her qualified retirement plan and purchased an annuity that began paying her income one month later
single premium immediate annuity
which of the following statements about systematic withdraws is false
systematic withdraw usually requires the contract owner to pay a surrender charge
compared to other investments, annuities offer which distinct advantage
tax deferred savings
the portion of an annuity payment that is not excludable under the exclusion ration is generally
taxed as ordinary income
which of the following types of life insurance provides protection with no savings element
term life
which of the following regarding the relationship between risk and return is true
the greater the risk, the greater the potential premium
during the payout period of a variable annuity
the number of annuity units remains fixed
daniel and karen are the annuitants of a joint and survivor annuity. If either karen or daniel dies
the surviving annuitant will continue to receive income payments for life
during the payout period of a variable annuity, the amount of annuity payments to be received by the annuitant is determined by
the value of an annuity unit
in a defined benefit retirement plan, the employer commits to paying a specified benefit to employees when they retire
true
insurance companies generally charge a fee for providing a death benefit in a variable annuity contract
true
the basic purpose of an annuity is the accumulation of money and the distribution of a lifetime income
true
under the free look provision, an investor who buys an annuity may return it for a full refund within a specified number of days
true
which types of annuities provide investors with the potential to earn stock market type returns
variable and equity based annuities
what type of annuity might its value at any given time be more or less than the actual amount paid in
variable annuity
the requirement that employees be given ownership of the employer contributions to their qualified retirement plans after completing a certain period of service is known as
vesting
which of the following statements about withdraw or surrender charges is true
withdraw charges usually decrease the term of the contract
characteristics of IRA
- withdraws before 59 1/2 may be subject to tax penaly - contributions may be tax deductible - earnings grow on a tax deferred basis
withdraws made from a simple within the first 2 years are generally subject to a penalty of
25%
the current yield of a stock is 40 per share. it paid an annual dividend of 5. what is the yield of the stock
40/5 = 12.5%
what is the greatest amount that a plan participant can borrow at any time from his corporate plan assuming the benefits are available
50,000 minus the amount of the highest outstanding loan during the one year prior to applying for a loan