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HS 300 > Chapter 8 TF > Flashcards

Chapter 8 TF Flashcards

1
Q

College cost inflation has historically outpaced the consumer price index.

A

True

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2
Q

CollegeSure CDs guarantee to keep pace with college cost inflation at an individual college or university.

A

False. The CollegeSure CDs keep pace with an index of school costs, not the costs at a particular school

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3
Q

Spending restrictions on a Uniform Gift to Minors Account can ensure that account proceeds are used for education expenses.

A

True

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4
Q

State-run prepaid college tuition plans can only be used in a state college or university.

A

False. State-run prepaid college tuition plan balances are portable

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5
Q

The Savings Bonds for Education program has no modified adjusted gross income limitations

A

False. There are MAGI limits on the Savings Bond for Education.

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6
Q

The Savings Bonds for Education program requires that the bonds be held in the student’s name

A

False. To qualify for the Savings Bonds in Education program the bonds cannot be held in the student’s name

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7
Q

The Lifetime Learning Credit is limited to the first 2 years of post-secondary education.

A

False. The Lifetime Learning Credit is available for all years of post-secondary education

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8
Q

The American Opportunity Credit is available for the first four years of post-secondary education

A

True

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9
Q

The interest expense deduction on education loans is subject to phaseout based on modified adjusted gross income.

A

True

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10
Q

Taxpayers are able to deduct qualified tuition and related expenses even if they do not itemize deductions, although these expenses are subject to phaseout based on modified adjusted gross income.

A

True

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11
Q

Retirement planning can facilitate education planning.

A

True

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12
Q

Grandparents can use a Section 2503(e) exclusion from taxable gifts to make college tuition payments for grandchildren.

A

True

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13
Q

Scholarship monies for room and board are taxable to the student

A

True

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14
Q

Section 529 College Savings Plans are free of federal income taxes when the proceeds are used for qualified educational expenses.

A

True

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15
Q

Section 529 College Savings Plan contributions generate a federal income tax deduction

A

False. Some states allow deductions for contributions to an in-state plan but there is no federal income tax deduction

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16
Q

Required contributions from parental assets is a lower percentage than required contributions from the student’s assets

A

True

17
Q

The Free Application for Federal Student Aid determines the expected parent contribution and expected student contribution and combines them to arrive at the expected family contribution.

A

True

18
Q

The student aid report is independent of the expected family contribution.

A

False. The student aid report includes the expected family contribution.

19
Q

Parents are expected to contribute 12 percent of unprotected assets.

A

False. Parents are expected to contribute 12 percent of unprotected assets but it only applies to 47 percent of those assets for an adjusted 5.6 percent.

20
Q

Federal Perkins loans are need based

A

True

21
Q

Stafford loans may be subsidized or unsubsidized depending on financial need

A

True

22
Q

Investing for an emergency fund is no different than investing for retirement.

A

False. Emergency fund investing focuses on short-term investments and liquidity. Retirement investing has a longer planning horizon.

23
Q

An emergency fund is fully funded if it has 2 months worth of living expenses

A

False. The rule of thumb for an emergency fund is 3 to 6 months of living expenses.

24
Q

An emergency fund has a lower priority than saving for retirement

A

False. An emergency fund should have a higher priority than retirement investing

25
Q

The size of your overall portfolio will influence the size of your emergency fund.

A

True

26
Q

A home equity line of credit can reduce the need for an emergency fund.

A

True

27
Q

Credit card debt is secured debt.

A

False. Credit card debt is unsecured.

28
Q

The debt service ratio includes estimated federal income taxes.

A

False. The debt service ratio does not include estimated federal income taxes

29
Q

A credit score is based on items not found in a credit report.

A

False. A credit score is based on items found in a credit report.

30
Q

The three main credit bureaus are Experian, Equifax, and First Union.

A

False. The three main credit bureaus are Experian, Equifax, and TransUnion.

31
Q

The lower your credit score the lower the interest rate on your loan.

A

False. A low score increases the interest rate you will pay on a loan

32
Q

About one-third of all new car sales involve lease financing.

A

True

33
Q

GAP insurance protects the lessee in the event a leased car is stolen or in an accident.

A

True

34
Q

A home equity loan or home equity line of credit is a type of second mortgage on a home.

A

True

35
Q

A home equity line of credit carries a fixed interest rate.

A

False. A home equity line of credit has a variable rate.

36
Q

The prime rate is not influenced by changes in the Federal Funds rate.

A

False. Changes in the Fed Funds rate typically show up almost immediately in the prime rate.

37
Q

Bankruptcies are classified by the applicable chapter of the bankruptcy code.
Answer

A

True

38
Q

A bankruptcy filing remains on the petitioner’s credit report for 6 years.

A

False. A Chapter 7 bankruptcy stays on the petitioner’s credit report for 10 years, a Chapter 13 for 7 years.

39
Q

An individual can file for Chapter 7 bankruptcy as often as he or she likes

A

False. An individual can file a Chapter 7 bankruptcy only once every 6 years.

HS 300 (23 decks)

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