General Principles Flashcards

Question

Education needs analysis

Answer 1

determine. .. 1) how much the 1st year of college will cost 2) amount tat must be available when child is 18 3) how muhc the parent needs to save either lump sum pv or yearly pmt

Answer 2

parent, grandparent, single with no dependents, trust

Answer 3

if successor owner is a trust, the original owner can control disposition of the trust through the terms of the trust.

Answer 4

owner can change bene to almost anyone... a long list. spouse, 1st cousin, uncle, sibling.

Answer 5

if rolled to a beneficiary in a generation below that of the current beneficiary, rollover will be treated as a taxable gift. if rollover stays in the same generation there is no taxable gift.

Answer 6

2k per year to benefit each child under age 18 not deductible earning accumulate tax def income limitations - single (100,000) Joint (200,000)

Answer 7

UGMA - cash type investment, transfer to child at 18/21, gift tax excllustion (13,000), subject to kiddie tax over 24 years, assets count against Fin aid UTMA - cash +real estate+LP, controlled by custodian until age 25 , same as above

Answer 8

applies to kids who have not attained age 24 by year end over 1900 -950 standard ded additional 950 taxes at children's rate of10%

Answer 9

purchased in parent's name can be put in UTMA, but won't qualify for the education expense deduction. If redeemed for college, int is taxable interest fully exempt from fed income tax only AGI limitation to get full tax free status.

Answer 10

Pell grant- Full time student, max 5,500 PLUS - non need based as anyone can apply Perkins Loans - college decides on student need, borrow 4000/yr total 20,000 Stafford loan- loan limited needs based

Answer 11

1) transfers of non cash items like property or loans = not alimony 2) pmts to 3rd party can if made by divorce agreement 3) pmts to maint property owned by the payor spouse an used by the payee don't qualify 4) if payee spouse owns the policy on the life of the payor spouse the payment made by the payor will qualify as alimony, if made under divorce instrument

Answer 12

not taxable to payee and non deductible by the payor any amt tied to a contingency of occurrence f an event relating to a child it considered to be child support and not alimony

Answer 13

Structure Settlement = tax free pmt Compensatory damage = generally tax free, int earned on award is taxable Punitive Damages = tax free, wrongful death annuity = fully taxable prizes and awards = fully taxable

Answer 14

Fiscal policy - federal taxation and spending designed to level out the business cycle Monetary Policy = Fed Reserve Board influences the growth of the money supply

Answer 15

Repo - feb buys securities - expansionary / easy money policy Reverse Repo- fed sells securities - contractionary / tight money policy

Answer 16

Recession = 2 consecutive quarters of decline in Real GDP Depression = severe or long recession (6 qtrs)

Answer 17

Inflation = rise in prices of good and services Deflation = decline in prices of goods and services Stagflation = combination of slow economic growth and high unemployement with rising prices

Answer 18

expansion, peak, contraction/recession, trough, recovery/expansion

Answer 19

the curve shows the market rates of interest for bonds of different maturities with the same credit rating. the relationship b/t the int rate and the time to maturity of the debt for a given borrower in a given currency

Answer 20

Buy home Adv - tax ded for interest and property taxes cap gai on the sale of the home on the excess of the exclusion (500,000 MFJ) Rent a home Adv - maybe lower than mort payment higher tax bracket = greater adv to own home.

Answer 21

``` Banks Lawyers Accountants Teacher - advice is incidental No compensation for advice newspaper gives advice only relating to U.S. govt securities ```

Answer 22

Advisers clients in one state Adviser whose only clients are insurance companies the family office

Answer 23

file form ADV part 1 and part 2 with the SEC Pays fee of $150 submits part 1 adv and schedule I updates on an annual basis

Answer 24

``` anyone seeking to sell securities Associated with Broker/Dealer Reg with FINRA through B/D on form U-4 Pass exams Receives CRD # ```

Answer 25

6 - sell MF, UIT and Variable (only new UITs) 7 - sell all securities except commodities and certain options 63 - state law exam 65 - Inv Adv Law Exam 66 - Comb - securities agents and adviser rep

Answer 26

agreement - offerer and acceptor consideration - something of value competent parties - legal capacity not intoxicated legal form- lawful purpose

Answer 27

Agent - rep the insurance company Broker - rep the client/insured

Answer 28

express authority - written, explicit direction from principal to agent Implied authority - agent to the public apparent authority - negligence of the principal in allowing the agent appear to have authority b/c certain action of agent in the past.

Answer 29

Chapter 11 - no source of income Chapter 13 - reorganization, can keep the stuff Chapter 7 debtor to claim federal or state exemptions not cancelable - student loans, govt loans, child support or alimony

Answer 30

Assets held in trust of a beneficiary charged with the responsibility of investing money wisely ex: executors of will and estates, trustee, underaged, or incompetent

Answer 31

IRR is equal to the interest rate

Answer 32

``` -100,000 +6000 +7000 +126,000 solve for IRR/yr ```

Answer 33

EE= 109,000-139,000 UGMA/UTMA = 109,250-139,250.... the point is that these are close

Answer 34

elementary secondary college

Answer 35

Fiscal - Prez, tax legislation Monetary changes - lower fed funds rate, bank reserve requirements,

Answer 36

protected from creditors if older than 2 years old

Answer 37

under 100 Mil under mgment

Answer 38

REG with SEC

Answer 39

``` Integrity Objectivity Competency Fairness Communicate Professionalism Discipline ```