407 Exam 2
Which of the following is(are) a type(s) of defined contribution, profit-sharing plan(s)? 1. ESOP 2. Stock bonus plan 3. Cash balance plan 4. Target benefit plan A. 2 only B. 1 and 2 C. 3 and 4 D. 1 and 4
B. 1 and 2
Which of the following is NOT a feature of a testamentary trust? A. It is created by the will. B. It may be subject to gift tax. C. It is included in the gross estate. D. It does not avoid probate.
B. It may be subject to gift tax.
Who holds the legal title to trust assets? A. Grantor B. Trustee C. Beneficiary D. Guarantor
B. Trustee
All of the following are advantages of a profit-sharing plan to businesses and business owners EXCEPT A. allowing discretionary contributions B. in-service withdrawals are prohibited C. controlling benefit costs D. may be providing legal discrimination in favor of older owner employees
B. in-service withdrawals are prohibited
If a person dies without a will, she is considered to have died A. testate B. intestate C. probate D. inter vivos
B. intestate
Which of the following statements concerning inflation is(are) CORRECT? 1.Inflation causes a loss of purchasing power. 2.Social Security retirement benefits are not inflation adjusted. 3.Many private pension plans are inflation adjusted. 4.After inflation, real economic returns are extremely low for many fixed-income securities. 5.The financial planner must account for inflation when projecting retirement needs. A. 1 and 2 B. 1, 3, 4 and 5 C. 1, 4 and 5 D. 1, 2, 3, 4 and 5
C. 1, 4 and 5
Which of the following is(are) fundamental purposes of the principle of indemnity? I. Reduce moral hazard. II. Prevent the insured from profiting from insurance. A. I only B. II only C. Both I and II D. Neither I nor II
C. Both I and II
Which of the following statements concerning qualified retirement plans is(are) CORRECT? I.Qualified pension plans include cash balance plans and target benefit plans. II. Qualified profit-sharing plans include stock bonus plans and Section 401(k) plans. A. I only B. II only C. Both I and II D. Neither I nor II
C. Both I and II
Which of the following statements concerning the legal requirements of insurance as a contract is(are) CORRECT? I. The agreement by which insurance is effected is a contract in which the insurer, in consideration of the payment of a specified sum by the policyowner, agrees to make good on the losses suffered through the occurrence of a designated unfavorable contingency. II. To be valid and enforceable, insurance contracts must meet 4 general legal requirements: an offer by one party and an acceptance by another party; a legal purpose or objective; legal competence of both parties; and a consideration exchanged by both parties to the agreement. A. I only B. II only C. Both I and II D. Neither I nor II
C. Both I and II
Which of the following statements concerning the reasons why businessowners need tax-advantaged retirement plans is(are) CORRECT? I.Tax sheltering income and solving liquidity problems that occur at retirement or death are why businessowners need tax-advantaged retirement plans. II. Sheltering assets from legal liability and bankruptcy and avoiding taxes on excess accumulated earnings are why businessowners need tax-advantaged retirement plans. A. I only B. II only C. Both I and II D. Neither I nor II
C. Both I and II
Which of the following statements describing how qualified plans are similar to SEP plans and SIMPLEs is(are) CORRECT? I.Qualified plans, SEP plans, and SIMPLEs all provide for deferred compensation. II. Plan sponsors SEP plans and SIMPLE IRA plans make contributions to an individual retirement account on behalf of the participant. A. I only B. II only C. Both I and II D. Neither I nor II
C. Both I and II
.The reduced costs in retirement may include 1.the elimination of costs associated with employment (certain clothing costs, parking, and some meal costs) 2.the elimination of mortgage costs if the mortgage debt is scheduled to be repaid by the time of retirement 3.the elimination of costs of children (tuition and clothing) 4.payroll costs—FICA 5.the potential elimination of savings because this is the time to use the accumulated savings A. 1 and 2 B. 1, 2 and 4 C. 2, 3, 4 and 5 D. 1, 2, 3, 4 and 5
D. 1, 2, 3, 4 and 5
Which of the following statements concerning qualified retirement plans is(are) CORRECT? I.Cash balance plans, money purchase pension plans, ESOPs, and incentive stock option plans are all examples of qualified retirement plans. II. Target benefit plans, defined benefit plans, profit-sharing plans, and deferred compensation plans are all examples of qualified retirement plans. A. I only B. II only C. Both I and II D. Neither I nor II
D. Neither I nor II
Which of the following is NOT a common transfer objective? A. Planning for care of children B. Minimizing estate and transfer taxes to maximize the assets received by heirs C. Meeting liquidity needs at death D. Planning for the incapacity of the transferee
D. Planning for the incapacity of the transferee
Which of the following statements regarding powers of attorney is CORRECT? A. A general power of attorney is the power to handle affairs related to property only .B. The powers are irrevocable. C. The power continues after the death of the principal. D. The principal must be 18 years old and legally competent when the power is granted.
D. The principal must be 18 years old and legally competent when the power is granted.
All of the following statements regarding Roth IRAs are correct EXCEPT A. total contributions for all Roth IRAs for the year cannot exceed $5,500 (for 2016) for an individual under age 50 B. Roth spousal IRAs are allowed for nonemployed spouses C. contributions to a Roth IRA are not deductible but distributions are tax free as long as certain eligibility requirements are satisfied D. contributions to Roth IRAs cannot be made after attainment of age 70½
D. contributions to Roth IRAs cannot be made after attainment of age 70½
Risk management is concerned with A. pure and speculative risks B. pure risks that are uninsurable C. pure risks that are insurable D. pure risks that are insurable or uninsurable
D. pure risks that are insurable or uninsurable
For a gain to be afforded preferential treatment, the asset must be 1.a capital asset 2.sold or exchanged 3.held for at least 6 months A. 1 and 2 B. 1 and 3 C. 2 and 3 D. 1, 2 and 3
The answer is A. In addition, the asset must be held long term or more than 1 year (1 year plus 1 day).
Which of the following statements regarding investment companies is(are) CORRECT? 1.Closed-end investment companies are commonly referred to as mutual funds. 2.A closed-end investment company is an investment company with a fixed capitalization, whose shares trade on exchanges and over the counter. 3.An open-end investment company is an investment company whose capitalization constantly changes as new shares are sold and outstanding shares are redeemed. 4.A unit investment trust is an unmanaged investment company, typically holding fixed-income securities, offering investors diversification and low operating costs. A. 2, 3, and 4 B. 1 only C. 1, 2, and 3 D. 2 and 4
The answer is A. Statement 1 is incorrect because open-end investment companies are commonly known as mutual funds.
All of the following statements regarding indirect investing in closed-end funds or mutual funds are correct EXCEPT A. if the market price of a closed-end fund exceeds the net asset value, the fund is selling at a discount; if the net asset value (NAV) of a closed-end fund exceeds the market price, the fund is selling at a premium B. mutual funds can be subdivided into load funds and no-load funds C. the 12b-1 fee covers a mutual fund's cost of distribution, marketing, and advertising D. no-load mutual funds are bought at net asset value directly from the fund by investors who purchase and redeem shares through the mail, wire, or telephone
The answer is A. Statement A is incorrect because if the market price of a closed-end fund exceeds the NAV, the fund is selling at a premium; if the NAV of a closed-end fund exceeds the market price, the fund is selling at a discount.
Which of the following statements regarding market efficiency is(are) CORRECT? I.The efficient market hypothesis (EMH) is the proposition that securities markets are efficient and that the prices of securities reflect their current economic value. II. Investors who believe the EMH usually adopt an active investment strategy. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is A. Statement II is incorrect because investors who believe the EMH usually adopt a passive investment strategy; investors who do not accept the EMH pursue active investment strategies.
Which of the following statements regarding capital market theory is(are) CORRECT? I.The capital market line (CML) is the graphical depiction of the capital asset pricing model (CAPM). II. The capital market line (CML) depicts the trade-off between risk and expected return for all assets, especially individual securities. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is A. Statement II is incorrect because the CML is used with efficient portfolios and is not appropriate for individual securities.
Rustin is a married taxpayer who files jointly with his spouse and has a short-term capital loss of $300 and a long-term capital loss of $3,800 in the current year. What deduction will Rustin be able to take from ordinary income in the current year? A. $1,500 B. $3,000 C. $3,800 D. $4,100
The answer is B. A taxpayer may deduct capital losses only to the extent of capital gains. On the taxpayer's IRS Form 1040, only the lesser of $3,000 [for married taxpayers filing jointly with a spouse (MFJ)] or the net capital loss may be deducted annually. A taxpayer who files as married filing separately (MFS) may only deduct a maximum capital loss of $1,500 annually.
Which of the following would be considered a capital asset? A. Copyrights or creative works held by the creator B. Securities held for investment C. Accounts or notes receivable arising in the ordinary course of a trade or business D. Inventory or property held for sale to customers in the ordinary course of a trade or business
The answer is B. Examples of capital assets include securities held for investment, a personal residence, and a personal automobile.
Hadley has a 33% marginal income tax rate, and she would like to invest in State of Texas bonds. If similar taxable investments yield 10%, what must Hadley earn on the state bonds to make the investment worthwhile?A. 5% B. 6.7% C. 10% D. 15.6%
The answer is B. Hadley would need to earn 6.7% [10% × (1 - 33%)].
All of the following are investments available through direct investing EXCEPT A. savings deposits, certificates of deposit, and U.S. savings bonds B. money market and hybrid mutual funds C. Treasury bills, commercial paper, and eurodollars D. option and futures contracts
The answer is B. Money market mutual funds and stock funds are examples of investment alternatives available through indirect investing.
Which of the following statements regarding preferred stock is NOT correct? A. Like an equity security, preferred stock has an infinite life and pays dividends; like a fixed-income security, the dividend is fixed in amount and known in advance. B. Preferred stock resembles bonds in that dividend income continues for a predetermined period unless the stock issue is called. C. Preferred stockholders are paid after bondholders but before common stockholders in terms of priority of payment of income and in case of liquidation. D. Preferred stock dividends are not legally binding but must be voted on each period by the corporation's board of directors.
The answer is B. Preferred stock differs from bonds in that dividend income continues in perpetuity, unless the stock issue is called or otherwise retired.
Which of the following statements regarding measures of portfolio performance is(are) CORRECT? I.Both the Sharpe and Treynor measures relate the excess return of a portfolio to a measure of its risk. II. The Sharpe ratio uses standard deviation, whereas the Treynor ratio uses beta. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C.
In determining adjusted gross income, the taxpayer may reduce gross income by which of the following? A. 100% of self-employment tax paid B. Alimony received from an ex-spouse C. Qualifying moving expenses D. Medical expenses
The answer is C. A taxpayer may reduce income by half of self-employment tax paid or alimony paid to an ex-spouse. Medical expenses are itemized deductions.
Which of the following is(are) considered ordinary income? 1.Salaries 2.Qualified dividends from a stock 3.Rent income to a partnership A. 1 only B. 1 and 3 C. 1, 2 and 3 D. None
The answer is C. All are considered ordinary income. The qualified dividends may be taxed at capital gains rates, however.
All of the following statements regarding common stock valuation are correct EXCEPT I.fundamental analysis seeks to estimate the intrinsic value of a stock, which is a function of its expected return and risk II.as for expected returns, because dividends are the only cash flows directly paid by a corporation, they are the logical choice for a present value model A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II
Which of the following statements regarding market efficiency is(are) CORRECT? I.To assess market efficiency, three cumulative forms of efficiency are discussed: the weak form, the semistrong form, and the strong form. II. The weak form of market efficiency involves market data, whereas the semistrong and strong forms involve the assimilation of all public and private information, respectively. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding measures of portfolio performance is(are) CORRECT? I.The most often used measure of portfolio performance are the composite measures of Sharpe, Treynor, and Jensen, which bring return and risk together into one calculation. II. The Sharpe and Treynor measures can be used to rank portfolio performance and indicate the relative positions of the portfolios being evaluated, whereas Jensen's measure is an absolute measure of performance. A. I only B. II only C. Both I and I ID. Neither I nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding portfolio management (is)are CORRECT? I.Portfolio management consists of building a portfolio, revising the portfolio on a regular basis, and measuring the portfolio's performance. II. If an investor pursues an active investment strategy, the issue of market efficiency must be considered when revising a portfolio. A. I only B. II only C. Both I and II D. Neither nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding risk is(are) CORRECT? I.Interest rate risk is the variability of a security's returns resulting from changes in interest rates. II. Inflation risk, or purchasing power risk, is the variability of security returns caused by the decline in the purchasing power of invested dollars. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding the P/E ratio approach to common stock valuation is(are) CORRECT? I.P/E ratios are inversely related to interest rates because interest rates are directly related to required rates of return. II. The P/E ratio is determined by dividing the current market price of the security by the earnings per share (EPS) for the company. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding the use of passive investment strategies as a way to select and manage common stocks is(are) CORRECT? I.Passive investment strategies emphasize minimizing transaction costs and time spent in managing the stock portfolio because expected benefits from active trading or analysis are likely to be less than the costs. II. Passive investors act as if the market is efficient and accept the consensus estimates of return and risk, regarding current market price as the best estimate of a security's value. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.
Which of the following statements regarding measures of portfolio performance is(are) CORRECT? I.Because the Sharpe ratio implicitly measures the lack of complete diversification in a portfolio and the Treynor ratio assumes complete diversification, portfolio rankings from the two measures can differ if portfolios are not well diversified. II. The information ratio is used to quantify the amount of incremental risk undertaken by a portfolio manager to achieve an excess return. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.9.
Which of the following statements regarding measures of portfolio performance is(are) CORRECT? I.Jensen's alpha measures the difference between what the portfolio was expected to return, given its systematic risk, and what it actually returned. II. By regressing the portfolio's excess return against that of the market index, alpha can be used to capture the superior or inferior performance of the portfolio manager. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.9.
All of the following statements regarding the use of the correlation coefficient in reducing portfolio risk are correct EXCEPT A. combining securities that have perfect positive correlation with each other provides no portfolio risk reduction B. combining two securities that have zero correlation with each other reduces portfolio risk C. combining two securities that have perfect negative correlation provides no portfolio risk reduction D. investors should seek out securities with the least correlation possible to reduce portfolio risk
The answer is C. C is incorrect because combining two securities with perfect negative correlation could totally eliminate risk. This is the principle behind hedging strategies.
All of the following statements regarding international investing are correct EXCEPT A. many U.S. companies now derive a large percentage of their revenues from abroad B. U.S. investors should be aware of capital flows from abroad into domestic financial markets C. emerging markets are markets of less developed countries, characterized by high risk and consistently high returns D. the rates of return available in foreign securities have often been larger than those available from U.S. markets
The answer is C. Emerging markets are markets of less developed countries, characterized by high risks and potential, but not consistent, high returns.
Which of the following regarding IRS guidance is CORRECT?A. A Letter Ruling is a written statement issued by an IRS district director that applies the principles and precedents announced by the National Office to a given set of facts. B. A Determination Letter is a statement issued for a fee at a taxpayer's request that describes how the IRS will treat a proposed transaction for tax purposes. C. A Private Letter Ruling is a written statement issued by the National Office of the IRS that gives guidance on the way the IRS will treat a prospective or contemplated transaction for tax purposes. D. Revenue Rulings are official pronouncements of the National Office of the IRS.
The answer is D. A Determination Letter is a written statement issued by an IRS district director that applies the principles and precedents announced by the National Office to a given set of facts. A Private Letter Ruling is a statement issued for a fee upon a taxpayer's request that describes how the IRS will treat a proposed transaction for tax purposes. A Letter Ruling is a written statement issued by the National Office of the IRS that gives guidance on the way the IRS will treat a prospective or contemplated transaction for tax purposes.
Which of the following is(are) an objective of the federal income tax law? 1.Revenue raising 2.Economic growth 3.Social policy A. 1 only B. 1 and 2 C. 1 and 3 D. 1, 2 and 3
The answer is D. All are objectives of the federal income tax law.
The 2016 FICA employee withholding rate is A. 6.75% B. 7.25% C. 7.5% D. 7.65%
The answer is D. FICA consists of 2 parts totaling 7.65% of gross pay. OASDI equals 6.2% up to the current wage base. Medicare equals 1.45% on all wages.
All of the following statements regarding financial markets are correct EXCEPT A. primary markets are where new issues are sold, and secondary markets are where existing securities are traded B. primary markets involve investment bankers who specialize in selling new securities C. underwriting is the process by which investment bankers purchase an issue of securities from a firm and resell the securities to the public D. in public placements, new issues are sold directly to financial institutions
The answer is D. Statement D is incorrect because new issues are sold directly to financial institutions in private placements.
All of the following statements regarding capital market theory are correct EXCEPT A. the capital asset pricing model (CAPM) allows an analyst to measure the relevant risk of an individual security as well as to assess the relationship between the risk and returns expected from investing B. the capital asset pricing model (CAPM) relates the required rate of return for any security to the risk for that security as measured by beta C. the market portfolio is the portfolio of all risky assets, with each asset weighted by the ratio of its market value to the market value of all risky assets D. the capital market line (CML), also known as the security market line, is the trade-off between expected return and risk only for efficient portfolios
The answer is D. Statement D is incorrect because the security market line specifies the equilibrium relationship between expected return and systematic risk and applies to individual securities as well as portfolios.
Which of the following statements regarding financial markets is(are) CORRECT? I.Secondary markets involve investment bankers who specialize in selling new securities. II. Primary markets, where securities are traded, consist of equity markets, bond markets, and derivative markets. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is D. Statement I is incorrect because the primary market involves investment bankers who specialize in selling new securities. Statement II is incorrect because it is the secondary market where securities are traded, which consists of equity, bond, and derivative markets.
If a preferred stock is paying a dividend of $4 and the investor' required rate of return is 10%, what is the value of the stock using the no-growth dividend discount model? A. $40 B. $4 C. $10 D. $12.50
(4/.1) = $40 A
Which of the following statements concerning qualified retirement plans is(are) CORRECT? I.Money purchase plans, ESOPs, target benefit plans, and stock bonus plans are all examples of qualified retirement plans. II. Deferred compensation plans, incentive stock option plans, and cash balance plans are all examples of qualified retirement plans. A. I only B. II only C. Both I and II D. Neither I nor II
A. I only
Which of the following statements describing how qualified pension plans differ from a SEP plan and a SIMPLE is(are) CORRECT? I.Qualified plan rules provide greater flexibility than SEP plan and SIMPLEs in the number and makeup of the employees covered by the plan II. Contributions must be fully and immediately vested in the contributions to qualified plans, but SEP plan sand SIMPLEs are permitted to have vesting schedules. A. I only B. II only. C. Both I and II D. Neither I nor II
A. I only
Tax credits reduce A. tax liability B. adjusted gross income C. tax withholding D. taxable income
A. tax liability
Boudreaux, age 30, wants to retire at age 60. He currently earns $50,000 per year. He has an objective to replace 75% of his preretirement income. He wants the retirement income to be inflation adjusted. Boudreaux has an investment portfolio valued at $150,000, which is currently earning 8% average annual returns. Boudreaux expects inflation to average 3% and, based on his family health, he predicts he will live to age 95. Boudreaux is currently saving 7% of his gross income at each year-end and expects to continue this level of savings. Boudreaux wants to ignore any Social Security benefits for purposes of planning. How much does he need to accumulate by age 60? A. $1,518,209.48 B. $1,591,908.97 C. $1,491,834.24 D. $2,122,545.29
B. $1,591,908.97
Most clients will retire between what ages? A. 58-62 B. 62-65 C. 65-69 D. 69-80
B. 62-65
Match the type of will with its definition. ____Holographic ____Nuncupative ____Statutory A. Dying declarations made before sufficient witnesses B. Generally drafted by an attorney, signed in the presence of witnesses, complying with the statutes for wills of the domiciliary state C. Handwritten will, dated and signed by the testator
C,A,B
Amber, age 50, currently earns $120,000. Her wage replacement ratio is 80%. She expects that inflation will average 3% for her entire life expectancy. She expects to earn 11% on her investments and to retire at age 62, living to age 90. She has sent for and received her Social Security benefit statement, which indicates that her Social Security retirement benefit in today's dollars adjusted for early retirement is $20,000 per year. How much does she need at retirement? A. $1,069,938 B. $1,223,313 C. $1,318,328 D. $1,600,293
C. $1,318,328
Which of the following is(are) a type(s) of defined contribution pension plan(s)? 1. Target benefit plan 2 Stock bonus plan 3. Money purchase pension plan 4. Profit-sharing plan with Section 401(k) provisions A. 3 only B. 3 and 4 C. 1 and 3 D. 1 and 2
C. 1 and 3
Which of the following is(are) NOT a type(s) of defined contribution pension plan(s)? 1. ESOP 2. Target benefit plan 3. Money purchase pension plan 4. Thrift plan A. 1 and 2 B. 4 only C. 1 and 4 D. 2 and 3
C. 1 and 4
Which of the following tax returns might the executor or administrator file for a decedent or the decedent's estate? 1. Form 706 2. Form 1040 3. Form 1041 4. Form 1120 A. 1 only B. 1 and 2 C. 1, 2 and 3 D. 1, 2, 3 and 4
C. 1, 2 and 3
All of the following insurance rating agencies evaluate the financial condition of insurers EXCEPT A. Moody's Investors Service B. AM Best, Inc C. National Association of Insurance Commissioners (NAIC) D. Standard & Poor's
C. National Association of Insurance Commissioners (NAIC)
Which of the following describes a survivorship clause in a will? A. Provides for the transfer of the balance of any assets not specifically mentioned in the will to a person or to an institution named by the testator. B. Provides an assumption that one spouse predeceased the other spouse. if both spouses die simultaneously. C. Provides that the beneficiary must survive the decedent for a specified period in order to receive the inheritance or bequest. D. Reminds heirs that disclaiming an inheritance can be an effective estate planning tool.
C. Provides that the beneficiary must survive the decedent for a specified period in order to receive the inheritance or bequest.
Which of the following usually details the testator's wishes regarding the disposition of tangible possessions, the disposition of the decedent's body, and funeral arrangements? A. Will B. Codicil C. Side instruction letter D. Tangible possession trust
C. Side instruction letter
All of the following are examples of qualified retirement plans EXCEPT A. a defined benefit pension plan B. a money purchase pension plan C. a profit-sharing plan D. a Section 457 plan
C. a profit-sharing plan
Each of the following is a characteristic of a defined benefit retirement plan EXCEPT A. the plan specifies the benefit an employee receives B. the plan has less predictable costs than defined contribution plans C. the plan assigns the risk of preretirement inflation, investment performance, and adequacy of retirement income to the employee D. the plan is relatively costly to administer compared to defined contribution plans
C. the plan assigns the risk of preretirement inflation, investment performance, and adequacy of retirement income to the employee
Which of the following is(are) NOT a type(s) of defined contribution, profit-sharing plan(s)? 1. Target benefit plan 2. ESOP 3. Thrift plan 4. Money purchase pension plan A. 4 only B. 2 and 4 C. 1 and 3 D. 1 and 4
D. 1 and 4
Some costs in retirement will decrease, and others will increase. Which of the following will typically decrease during retirement? 1.Employment costs 2.Children's expenses 3.FICA 4.Savings A. 1 and 2 B. 1, 2 and 4 C. 2, 3 and 4 D. 1, 2, 3 and 4
D. 1, 2, 3 and 4
Which of the following is(are) a type(s) of defined contribution plan(s)? 1. ESOP 2. Money purchase pension plan 3. Stock bonus plan 4. Target benefit plan A. 2 only B. 2 and 4 C. 1, 2 and 4 D. 1, 2, 3 and 4
D. 1, 2, 3 and 4
Which of the following persons need estate planning?1. Dave, single, with a net worth of $1 million. 2. Jim, married, with 9 children, 6 grandchildren, and a net worth of $400,000. 3. Steve, divorced, whose only daughter is severely challenged physically, and whose net worth is $20,000. 4. Beth, who is single, has a net worth of $50,000, and has 2 dogs that she considers her children. A. 1, 2 and 3 B. 2 and 3 C. 2, 3 and 4 D. 1, 2, 3 and 4
D. 1, 2, 3 and 4
Which of the following trusts is(are) generally revocable? A. CRT B. QTIP C. POA trust D. None of the above
D. None of the above
A taxpayer may incur an AMT liability if he has which of the following items of deduction or income? 1.State and local income taxes 2.Straight-line depreciation 3.Exercise of incentive stock options A. 1 and 3 B. 2 only C. 2 and 3 D. 1, 2 and 3
The answer is A. Other items are real property taxes, interest on certain private activity bonds purchased before January 1, 2009 and after December 31, 2010, and gain on the sale of Section 1202 small business stock..
Which of the following statements regarding market efficiency is(are) CORRECT? I.An efficient market is one in which security prices quickly and fully reflect all available information. II. The efficient market hypothesis states that securities markets are efficient and security prices reflect their true economic value. A. I only B. II only C. Both I and II D. Neither I nor II
The answer is C. Both I and II are correct.
