WAB General Principles

Question 1

Net worth is _______ by purchasing an asset with a partial loan

Answer 1

Unchanged/unaffected

Question 2

Coverdell ESA Accounts

Answer 2

• been is under 18 during contributions
• can invest in stocks/bonds
• contributions are treated as a gift
• qualified expenses include religious elementary

Question 3

If a client takes a reverse mortgage and passes away, then

Answer 3

• the heirs can sell the house & use proceeds to pay it off
  OR
• the heirs can refinance to pay off the mortgage balance

Question 4

Auto sales lead the business cycle into

Answer 4

Expansion

Question 5

Negligence is an…

Answer 5

Unintentional tort

Question 6

Emergency Fund calcs include

Answer 6

Fixed and variable expenses but NOT taxes

Question 7

UTMAs are considered ____ assets for financial aid
529s are considered _____assets for financial aid

Answer 7

1) student
2) parent

Question 8

Treasuries are ______ by the US govt

Answer 8

GUARANTEED NOT INSURED

Question 9

Brokered CDs carry ______ while regular CDs do not

Answer 9

Interest rate risk

Question 10

Securities in a brokerage account are __________ by SIPC

Answer 10

“LIKELY insured”

Question 11

SEC regulates brokerage companies through ______

Answer 11

FINRA

Question 12

Best transfer arrangements for unmarried partners are

Answer 12

Revocable trusts and TIC (not a will)

Question 13

If a money winner chooses the annuity option to payout over 10 years

Answer 13

• payouts are taxed as received
• must opt in during 60day window

Question 14

Compensatory damages and structured settlements are______ but punitive damages are________

Answer 14

1) tax free
2) taxable

Question 15

Are capital goods and consumer durable goods affected by a recession?

Answer 15

YES

Question 16

When a client wants to live SOLELY off of return (not principal)…..

Answer 16

1) Divide the amount needed by the rate of return adjusted for inflation
2) add one year amount

Question 17

You must notify the CFP board of a reportable matter within

Answer 17

30 days

Question 18

CFP Suspensions are_________

Answer 18

Automatically published

Question 19

CFP Revocation is

Answer 19

Permanent

Question 20

Who controls monetary policy

Answer 20

FOMC

Question 21

Who sets the prime rate

Answer 21

BANKS not the fed

Question 22

CH. 11
CH. 13
CH. 7

Answer 22

7 - discharges debt/federal exemption
13 - reorganization/debt reduced and paid over 5 yrs
11 - no regular source of income/partial or complete discharge of debt

Question 23

Agents are loyal to the

Answer 23

Company

Question 24

Brokers are loyal to the

Answer 24

Client

Question 25

Federal Housing Administration (FHA)

Answer 25

Govt guarantees mortgages through FHA insurance for low to middle income individuals

(Mortgage max between $270k-730k)

Question 26

What are the forms of discipline for the CFP Board to administer?

Answer 26

• private censure
• suspension
• revocation
• public letter of admonition

(NOT private letter of admonition)

Question 27

Can you pay down a mortgage to reduce PITI

Answer 27

No PITI remains constant but the loan will be paid off quicker