Chapter 3 Flashcards
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
What is not pertinent when opening an account, a client’s educational or financial background?
educational
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
If a client wins $1 million, what should a RR do?
Update the account form
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
If an asset was held for one year or less prior to its sale, any gain or loss would be ____________.
short term
For a gain to be considered long-term, the asset must be held for ______________________.
more than 1 year
What is the first use of capital losses?
deductions against capital gains
If there are losses remaining after offsetting gains, what amount may be used against ordinary income?
$3,000
What happens to losses that remain after offsetting gains and also taking $3,000 against ordinary income?
carried over to subsequent years
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)
How large can a gift be between spouses and remain exempt from the gift tax?
no limit between spouses
Progressive taxes are also referred to as ____________ taxes.
Graduated Taxes (change based on income/gain)
Regressive taxes are also referred to as _______ taxes.
Flat Taxes (same amount no matter income/gain)
Income or estate tax is an example of a _______________________ tax.
Progressive Tax
