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