Quiz 2

Question 1

Errant plan officials ______ be held personally liable for losses to the plan as well as other factors. ERISA prohibits monetary punitive damages for claims.

Answer 1

can

ERISA prohibits monetary punitive damages for claims.

Question 2

An ISO is a right to buy the employer’s stock and ______ compensation.

Answer 2

is not

However, if the ISO becomes disqualified because the stock is exercised and sold in the same calendar year, the employee may be required to recognize any profits as compensation.

Question 3

Deferred compensation_______ compensation for tax purposes until it is constructively received.

Answer 3

is not

Question 4

AOC and Lifetime Learning Credit are both subject to _______.

Answer 4

MAGI phase outs

Question 5

The _________ annuity always produces the highest payout.

Answer 5

Life

A life annuity may also be called as a pure life annuity or a straight life annuity.

Question 6

What happens with a QPRT if the grantor dies during the retained-interest term?

Answer 6

The full value of the home generally reflecting the date of death FMV is brought back into the gross estate. Had the QPRT never been established, the estate would have the same tax exposure because the property would appear in the gross estate at FMV.

Question 7

For it to be penalty-free, The IRA distribution must be for the purchase of a _____ home.

Answer 7

First

The distribution must be for the purchase of a first home, not necessarily a primary residence.

Question 8

An increase in European interest rates would ______ the value of German bonds.

Answer 8

decrease

If a U.S. investor owns securities denominated in a foreign currency, that individual would profit if the dollar declined (devalued) or the value of the foreign currency rose (revalued). If U.S. interest rates decline, the value of the dollar will decline.

Question 9

The measure of the systematic risk of a security

Answer 9

Beta

Question 10

To reduce AMT payable, ______ regular income

Answer 10

Increase

Question 11

When the R2 is high, Alpha becomes important. If the Alpha is _______, the fund does not appear to be a wise purchase.

Answer 11

negative

Question 12

For the American Opportunity Credit only, an otherwise eligible student can be excluded if _______________.

Answer 12

convicted of a felony