General Principles

Question 1

Who sets Fiscal Policy and what levers can they pull to influence the economy?

Answer 1

U.S. Congress and government spending and taxation

Question 2

Who sets monetary policy and what 3 things can they do in a contractionary environment to tighten?

Answer 2

The Federal reserve bank and they can increase the discount rate, increase the reserve requirements and sell securities on the open market.

Question 3

List 3 qualifications for a 529 able plan:

Answer 3

1) diagnosis of a significant disability prior to age 26
2) expected to last at least 12 consecutive months
3) Must be in receipt of benefits under SSI and/or SSDI OR be able to obtain disability certification from a doctor

Question 4

For the EFC amount, parent’s assets are included at a max rate of _

Answer 4

5.64%

Question 5

Most debts are eliminated under chapter 7 bankruptcy. Name the 5 that are not.

Answer 5

1) Child support
2) Alimony
3) Income taxes less than three years past due
4) Student loans
5) Secured debt (ex: homes and cars backed by another asset)

Question 6

Length of credit history accounts for what percent of an individual’s credit score?

Answer 6

15%

Question 7

What are 2 other names for the front-end ratio?

Answer 7

The housing cost ratio or mortgage debt ratio

Question 8

What are the 2 other names for the back-end ratio?

Answer 8

The total debt ratio or the debt repayment ratio

Question 9

What is another name for the consumer debt ratio?

Answer 9

Simply the debt ratio

Question 10

What are qualified expenses in a 529 plan?

Answer 10

College tuition, fees, books, computers, and related equipment, supplies, special needs; room and board for minimum half-time students. Up to 10K in tuition expenses, ONLY TUITION, for K-12 schools. Up to 10K annually in student loan payments.

Question 11

What is the federal estate tax treatment for a 529 plan?

Answer 11

Value is removed from the donor’s gross estate; partial inclusion for death during a 5-year election period.

Question 12

Can you put an EE or I bond in an UTMA/UGMA?

Answer 12

You cannot

Question 13

What are the age restrictions for a coverdell?

Answer 13

Must make contributions BEFORE beneficiary reaches age 18 and use account or change beneficiary by age 30

Question 14

What is the definition of GDP

Answer 14

the market value of the goods and services produced by labor and property in the United States

Question 15

What are the max investments for a series EE and series i bond?

Answer 15

Series EE: $10,000 per year, per owner
Series I: $10,000 (digital); $5,000 (paper) per year, per owner

Question 16

In a 529 ABLE plan, account balances of _ are disregarded for Federal Financial Aid

Answer 16

100,000

Question 17

If a student receives a scholarship for $5,000, how much is the parent able to withdraw penalty-free but not tax-free from the 529 account?

Answer 17

$5,000

Question 18

What is the student protected amount from income used in the EFC formula?

Answer 18

$9,410

Question 19

Are rollovers permitted from a 529 account to a 529 able account?

Answer 19

Only if the beneficiary of the able account is the designated beneficiary of the tuition account or is an eligible family member.

Question 20

What is expansion characterized by?

Answer 20

Increasing GDP and decreasing unemployment.

Question 21

What is contraction characterized by?

Answer 21

Decreasing GDP and increasing unemployment?

Question 22

What is peak characterized by?

Answer 22

Very high GDP and very low unemployment.

Question 23

What is trough characterized by?

Answer 23

Very low GDP (very typically negative GDP) and by high and widespread unemployment. Ex: -4.2% GDP coupled with widespread unemployment

Question 24

If there is a calculator question with a loan amount, will the loan amount by added to the FV at the beginning or the PV at the end?

Answer 24

FV at the beginning

Question 25

Origination points in a mortgage are a percentage of what?

Answer 25

The down payment