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Flashcards in Chapter 3 Deck (19)
1

What is some of the important information to obtain when opening a new client’s account?

Name, address, age, occupation, SSN, citizenship, income, net worth, objectives, risk tolerance, investment experience

2

What is not pertinent when opening an account, a client’s educational or financial background?

educational

3

If a client refuses to provide certain information, may the account still be opened?

yes, but firm has discretion not to if feels not given enough info. name and address ARE required

4

If a client wins $1 million, what should a RR do?

Update the account form

5

True or False: Using a P.O. Box as an address is not acceptable to open an account.

True; but mail may be sent to P.O. Box

6

If an asset was held for one year or less prior to its sale, any gain or loss would be ____________.

short term

7


For a gain to be considered long-term, the asset must be held for ______________________.

more than 1 year

8

What is the first use of capital losses?

deductions against capital gains

9

If there are losses remaining after offsetting gains, what amount may be used against ordinary income?

$3,000

10

What happens to losses that remain after offsetting gains and also taking $3,000 against ordinary income?

carried over to subsequent years

11

What generates a capital gain or loss?

The sale of an asset at a price that exceeds its basis (gain) or at a price lower than its basis (loss)

12

How large can a gift be between spouses and remain exempt from the gift tax?

no limit between spouses

13


Progressive taxes are also referred to as ____________ taxes.

Graduated Taxes (change based on income/gain)

14


Regressive taxes are also referred to as _______ taxes.

Flat Taxes (same amount no matter income/gain)

15

Income or estate tax is an example of a _______________________ tax.

Progressive Tax

16

Sales tax is an example of a _____________________ tax.

Regressive Tax

17

Is a gift of $14,000 per person, per year, exempt from gift tax?

yes

18

Is a gift of $28,000 per married couple, per year, exempt from gift tax?

yes, as long as 14,000 goes to each spouse

19

What are the capital gains tax rates?

long term - 20%
short term - ordinary income tax rate