WME Review Notes Flashcards
What are the three income brackets and related grant brackets for the CESG for an RESP?
-Under 53,359$: 40% of first 500$ deposits and 20% on the next 2,000$.
-Between 53,359$ - 106,717$ 30% of first 500$ and 20% on the next 2,000$.
-Above 106,717$ of net family income is 20% overall.
What is the grant rules for an RDSP annually and lifetime limit?
-3,500$ maximum annual
-70,000$ lifetime limit.
Note: Government grant & bonds must stay in an RDSP for at least 10 years to avoid being clawed back with a 3 to 1 withdrawal/clawback rule and because of this gvt grants will not be applied to any deposits made after age 49.
What is the maximum you can invest in an RDSP
-200,000$ lifetime limit and must be invested in the year the beneficiary turns 59.
What is the formula for the price of a mortgage backed security?
Price of MBS = Cost X Pool Factor
What is the formula for Gross Debt Service Ratio (GDS)
GDS = (Mortgage payments + property taxes + Heating Costs + 50% of condo fees)/Gross family income
What is the formula for Total Debt Service Ratio (TDS)
TDS = (Mortgage or rent payments + property taxes + home heating costs + 50% of condo fees + Minimum required debt payment)/Gross family income
What is the upper limit for the GDS?
32%
Wat is the upper limit for TDS?
40%
What does Jensen’s Alpha tell you?
Jensen’s alpha is a measure of the manager’s performance.
-If Jensen’s alpha is positive, the manager has produced more return then predicted by the portfolio’s beta and has therefore added value to the portfolio.
What is Beta?
Beta measures the volatility of an investment relative to some benchmark. The benchmark will have a beta of 1 and if the investment has a beta greater then 1 it will be more volatile and less then 1 will be less volatile.
What is Alpha?
Alpha can also be said to be Excess Return. It measures if an investment has added excess return then the benchmark.
What is the Sharpe Ratio?
This ratio measures the excess average return per unit of total risk for a given period.
Said a different way, this measures if the product had better or worse risk adjusted returns then the risk free return.
Is Child support tax deductible to the payor and taxable to the payee?
No, child support is not tax deductible and not taxable.
Is spousal support tax deductible to the payor and taxable to the payee?
Yes. Spousal support is tax deductible to the payor and taxable to the payee.
What is pure risk?
When there is the possibility of loss or no loss.
What is speculative risk?
When there is the possibility of loss or gain
What is objective risk?
When most people would agree (especially experts) that there is a risk.
What factors allow you to qualify for the RRSP HBP Plan?
You must own or live in a home as a principle place of residence for 4 years
How does the federal tax credit work for donations to charities?
-15% of first 200$ donation
-Remainder of donation gets 29% back.
Ex: 25,000$ donation:
(200$ X 15%) +((25,000$-200$) X 29%) = 30$ + 7,192$ = 7,222$
What is the R-Squared relationship with unsystematic risk?
The greater the unsystematic risk, the lower the Rsquared value.
