Question 1

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider the client: Type, needs/goals, and profile?

Accepted Answer

Yes.

Question 2

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider the risks: How to measure risks?

Accepted Answer

Yes.

Question 3

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider ﻿﻿the returns: How to measure returns?

Accepted Answer

Yes.

Question 4

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider the investment strategy or style: Passive, active, or other?

Accepted Answer

Yes.

Question 5

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider portfolio management: The use of Modern Portfolio Theory?

Accepted Answer

Yes.

Question 6

To properly advise a client and formulate investment recommendations that are suitable to that client, is an IA and IAR required to carefully and thoroughly consider tax consequences?

Accepted Answer

Yes.

Question 7

In a joint account, are the social security numbers of all owners recorded to report taxable events?

Accepted Answer

No. All taxable events are reported under one SSN.

Question 8

What is a Joint Tenants with Rights of Survivorship account?

Accepted Answer

Joint account w/a husband and wife. Upon the death of a spouse, his or her interest passes automatically to his or her surviving widow (and vice versa).

Question 9

What is Tenants in Common?

Accepted Answer

Joint account w/a couple. Upon the death of one of the individuals involved, that person’s interest in the account passes to his or her estate, and NOT to the surviving member of the account. Tenants in common arrangements are FREELY TRANSFERABLE (designed to change hands upon the death of an owner).

Question 10

What is Tenants by Entirety?

Accepted Answer

1) . property interest between a husband and wife. 2) . each party has a right of survivorship over the property. 3) . neither party can terminate without the consent of the other. A tenancy by the entirety is a form of concurrent ownership that can only exist between a husband and wife.

Question 11

On New Account Report Forms, does the customer's name have to be included?

Accepted Answer

Yes.

Question 12

On New Account Report Forms, does the customer's contact information (address and telephone numbers) have to be included?

Accepted Answer

Yes.

Question 13

On New Account Report Forms, does the customer's occupation, employer, and business address have to be included?

Accepted Answer

Yes.

Question 14

On New Account Report Forms, does the customer's citizenship have to be included?

Accepted Answer

Yes.

Question 15

On New Account Report Forms, does the customer's date of birth have to be included?

Accepted Answer

Yes.

Question 16

On New Account Report Forms, does the customer's SSN or Tax ID Number have to be included?

Accepted Answer

Yes.

Question 17

On New Account Report Forms, does the customer's Government-issued photo identification have to be included?

Accepted Answer

Yes.

Question 18

On New Account Report Forms, does the customer's investment objectives have to be included?

Accepted Answer

No. Would be included on the investment policy statement.

Question 19

On New Account Report Forms, does the customer's risk tolerance have to be included?

Accepted Answer

No. Would be included on the investment policy statement.

Question 20

What is required if a customer wants their account name to be a number?

Accepted Answer

Numbered accounts require a written statement attesting to ownership of the account

Question 21

In a sole proprietorship, can losses be used to offset income for tax purposes?

Accepted Answer

Yes.

Question 22

Do sole proprietors have to pay self-employment tax for themselves and employees?

Accepted Answer

Yes.

Question 23

Does a partnership have unlimited life?

Accepted Answer

No. usually ends with certain events (not on a specific date) -- such as death or withdrawal.

Question 24

What is the tax advantage of a partnership?

Accepted Answer

income is taxed only once at the partner level since the partnership itself is NOT a taxable entity. This is called “flow through,” “pass through,” or “conduit taxation.”

Question 25

Do general partnerships offer continuous existence?

Accepted Answer

No. General partnerships have limited life.

Question 26

In a general partnership, what is startup capital limited to?

Accepted Answer

the amount put in by each partner.

Question 27

In a general partnership, what does transfer of ownership require?

Accepted Answer

approval from all general partners.

Question 28

Do sole proprietors have unlimited personal liability?

Accepted Answer

Yes. The owner should carry liability insurance.

Question 29

Do general partnerships have unlimited personal liability?

Accepted Answer

Yes.

Question 30

What does it mean when we say limited partnerships (such as real estate partnerships and oil and gas programs) are investments which allow the investor certain "tax advantages"?

Accepted Answer

Tax advantages means write-offs.

Question 31

What is the greatest risk of investing in a limited partnership?

Accepted Answer

The greatest risk of investing in a Limited Partnership is the lack of liquidity since many limited partnerships are NOT publicly traded and ANY transfer of ownership requires approval of the GP.

Question 32

In a limited partnership are general partners (sponsors/managers) subject to unlimited liability?

Accepted Answer

Yes.

Question 33

in a limited partnership, are limited partners subject to unlimited liability?

Accepted Answer

No. Their liability is limited to the amount of their "at risk" investment in the entity.

Question 34

What is the primary function of limited partners?

Accepted Answer

to provide capital (money).

Question 35

What year and at what rate are distributions to limited partners taxed?

Accepted Answer

Distributions to limited partners are taxed in the year the distribution was received at the LP’s participation rate.

Question 36

If an IA oversees a securities portfolio of a Limited Partnership, what would be the most important consideration in determining an investment strategy?

Accepted Answer

the income needs and requirements of ALL of the partners.

Question 37

What is a "C" corporation?

Accepted Answer

1) . has issued common stock and is TF owned by shareholders. 2) . is a legal and taxable entity separate from their owners. Corps are in contrast to the partnership bc those are not separate from its owners.

Question 38

How are corporations created?

Accepted Answer

Corporations are created by filing a charter with the state.

Question 39

Can C Corps own real property?

Accepted Answer

Yes.

Question 40

Can C Corps be a general partner in an outside investment?

Accepted Answer

Yes.

Question 41

Can C Corps enter into contracts as a business entity?

Accepted Answer

Yes.

Question 42

What is the liability to owners of a corporation (shareholders)?

Accepted Answer

Owners (shareholders) have limited personal liability. Shareholders are only liable for the amount they invested.

Question 43

Do corporations have perpetual existence?

Accepted Answer

Yes, corporations have unlimited life.

Question 44

Are fringe benefits greater (and better) in a corporation than in a partnership?

Accepted Answer

Yes.

Question 45

Could fringe benefits be deductible?

Accepted Answer

they may be.

Question 46

What are fringe benefits?

Accepted Answer

extra benefit supplementing employee salary (co. car, subsidized meals, health insurance, etc.)

Question 47

How long can net capital losses be carried over to offset capital gains?

Accepted Answer

for up to 5 years.

Question 48

Is the C-Corp subject to alternative minimum tax?

Accepted Answer

Yes.

Question 49

What is double taxation?

Accepted Answer

Corporate income gets taxed, then when income remaining is paid out to shareholders, the shareholders are taxed on their dividend income.

Question 50

How is an S-Corp different than a C-Corp?

Accepted Answer

An S-Corp works like a partnership with a flow through of income and expenses to its owners (shareholders). In contrast, a C-Corp does not flow through to its owners (shareholders). It is a separate entity from its owners and may (not required to) pay them dividends if declared by the BOD.

Question 51

What is the big advantage of an S-Corp over a C-Corp?

Accepted Answer

The big advantage of an “S” corporation over a “C” corporation is no double taxation!

Question 52

Does an S-Corp provide limited liability to its owners?

Accepted Answer

Yes.

Question 53

Does an S-Corp provide pass-through taxation to its owners?

Accepted Answer

Yes.

Question 54

How many shareholders can an S-Corp have?

Accepted Answer

100 or fewer (formerly 75).

Question 55

Is S Corp status available to large corporations?

Accepted Answer

No.

Question 56

Do capital gains and capital losses on S Corps pass through to shareholders as ordinary income?

Accepted Answer

No. as shareholder capital gains and capital losses.

Question 57

Do S Corps have unlimited life?

Accepted Answer

Yes.

Question 58

What are the owners of a Limited Liability Company (LLC) called?

Accepted Answer

Members.

Ch 08(1) Inv Recs -- Clients | Intro and Types of Clients Flashcards

Define different types of clients of investment advisors [TRUNCATED of topics already mastered].

Brainscape's Knowledge GenomeTM

Ch 08(1) Inv Recs -- Clients | Intro and Types of Clients Flashcards

Define different types of clients of investment advisors [TRUNCATED of topics already mastered].

Brainscape's Knowledge Genome^TM