What are the 4 rules in terms of investing in a small firm? - ANSWER-Time frame of at least 3-5 years, diversify among 20-30 different issues, avoid turnover of 30% annually, and sell if and when 40% of company's shares become owned by institutional investors.
What is a characteristic of an unfu...
What are the 4 rules in terms of investing in a small firm? - ANSWER-Time frame of at least 3-5 years,
diversify among 20-30 different issues, avoid turnover of 30% annually, and sell if and when 40% of
company's shares become owned by institutional investors.
What is a characteristic of an unfunded excess benefit plan? - ANSWER-The plan generally need not
comply with either the disclosure or reporting requirements of ERISA.
Unfunded excess benefit plans need not comply with ERISA disclosure or filing requirements.
What is a correct statement regarding federal transfer taxation of the transfer of wealth? - ANSWER-
The generation-skipping transfer tax (GSTT) can be applied to transfers of wealth between parties
who are not related to each other.
If the transferor and transferee are not related to each other in any way, the GSTT can still apply if
the transferee is more than 37.5 years younger than the transferor. The gift tax is tax exclusive. Direct
payment of tuition expenses is exempt from gift tax and GSTT, but is not exempt from estate tax. The
marital deduction merely delays application of the gift or estate tax until the recipient spouse dies.
According to the investment pyramid, what sequence is correct in terms of increasing safety of
principal (least to most safety of principal)? - ANSWER-*futures contracts, balanced mutual funds, EE
bonds
In terms of increased safety of principal, of the four sequences given, the investment pyramid in the
study materials shows futures contracts (least safety), balanced mutual funds, EE bonds (most safety
with principal guaranteed by the U.S. government) is the correct sequence.
Three years ago, Kerri received a gift of 1,000 shares of Mica Inc. common stock from her parents.
The fair market value of the stock on the date of the gift was $20,000. Kerri's parents purchased the
stock several years earlier for $40,000. She sold this stock for $31,000 last week. What is the amount
of gain or loss, if any, from Kerri's stock sale? - ANSWER-$0
Where the fair market value on the date of gift is less than the donor's adjusted basis, and the asset
is sold at a price between the fair market value on the date of gift and the donor's adjusted basis,
there is no gain or loss recognized on the sale.
What trust will not entitle the grantor to take an annual exclusion upon funding the trust? - ANSWER-
*Bypass trust in which income is paid at the discretion of the trustee
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