Section 3

William died in 2019 with the following assets and liabilities: $200,000 in securities left to his wife, $650,000 home left to his wife (the home cost $150,000), $250,000 life insurance policy with his daughter named as beneficiary, and $75,000 in debts and estate expenses. What is William's net estate? A) $175,000 B) $0; it is below the $11.4 million exemption equivalent C) $625,000 D) $750,000

A The $1.1 million gross estate (add together the assets ($200,000 + $650,000 + $250,000) is reduced by the $850,000 left to his wife. That brings the net estate down to $250,000 ($1,100,000 minus $850,000). The net estate is further reduced by the $75,000 in debt and expenses. Subtracting $75,000 from $250,000 leaves a net estate of $175,000.

Each of the following are advantages offered by a nonqualified deferred compensation plan that are not found in a qualified plan except A) they are an attractive benefit for highly compensated employees because they're free from the contribution limits. B) employer contributions to the plan are not subject to current taxation to the employee. C) they are an attractive benefit to the employer because participation requirements and nondiscrimination restrictions do not apply. D) deferred compensation plans are not subject to most of the requirements of the Employee Retirement Income and Security Act of 1974 (ERISA).

B

Harry Thomas has turned 19 and decided that he is going to join the Marines and postpone going to college. If Harry decides to stay in the military, the unused funds contributed to his Coverdell ESA A) must remain in the plan until Harry's 30th birthday B) must be distributed to Harry no later than 30 days after his 21st birthday C) must be returned to the donor with tax plus a 10% penalty on the earnings D) may be transferred into another Coverdell ESA for Harry's 25 year-old cousin, Julia

D

Savant Investment Managers (SIM) has a client with a long position in PQR common stock. The position has an average cost per share of $30, and with PQR currently selling at $50 per share, the client is interested in a method that will allow her to protect some of the unrealized profit without an expenditure of funds. Her representative at SIM could suggest A) entering a buy stop order at $45. B) buying PQR 45 put options. C) entering a sell stop order at $55. D) entering a sell stop order at $45.

D "Without an expenditure of funds" keys to a sell stop instead of an option

When acting in an agency capacity for a customer, a BD cannot place a third party between itself and the best available market; they must go directly to the market maker. This is known as?

Interpositioing

Upon death, does the beneficiary inherits the NAV or POP?

NAV

Some market makers, in an attempt to increase order flow, will pay other broker-dealers for routing customer orders to them. This is known as?

Payment for order flow