Wrong Answer Cards

Question 1

Liquid Assets

Answer 1

-ETFs, MFs, and Government bond funds are NOT considered liquid.

-CDs and MMFs are!

Question 2

Beta

Answer 2

• Measures systematic risk (not total risk)
• Beta of 2 is 100% more volatile than average stock
• Expresses volatility (not variability)

Question 3

Markowitz model includes:

Answer 3

• Uses SD as a risk measurement!
• Covariance, Correlation coefficient, standard deviation, return
• NO BETA

Question 4

Duration

Answer 4

• Inverse relationship with interest rates!
• Interest rates go up, duration goes down
• Smaller the coupon, more volatile price
• Longer the duration, more volatile price

Question 5

Who’s most likely to buy STRIPS?

Answer 5

Pension plan because they’re tax deferred!

(Zero coupon bonds)

Question 6

Bond Put Features

Answer 6

Bonds can be redeemed back to issuer at face value even when market value has declined

Question 7

HPR (Holding Period Return)

Answer 7

YOU DONT HAVE TO SELL THE STOCK TO CALCULATE IT

Question 8

When must an individual file and income tax return for self-employment?

Answer 8

An individual is required to file if net earnings from self-employment are at least $400

Question 9

Which form is used to amend a tax return?

Answer 9

1040X

Question 10

Student loan interest deductibility

Answer 10

Limited to $2,500. Deductible on Schedule 1

Question 11

When is alimony included in an adjusted gross income?

Answer 11

If divorced before 2019

Question 12

Who can’t use NOL? (net Operating losses)

Answer 12

S-Corps because they are pass through entities.

Question 13

Deduction for Federally Declared Disaster

Answer 13

Lessor of FMV or Basis
Minus: Amount reimbursed by insurance
Minus: $100 floor
Minus: 10% of AGI

Question 14

GPs & LPs - Passive or Active income?

Answer 14

GPs are ACTIVE.
LPs are typically passive.