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Question 1 of 10
1. Question
What is not true about Individual clients?
Correct
An individual client is a non-business client that is either a natural or legal person. This may include a person, a deceased person via his or her estate, or a trust. Individual accounts are established to meet the clients’ stated goals. These written goals are often referred to as the Investment Policy Statement.
Incorrect
An individual client is a non-business client that is either a natural or legal person. This may include a person, a deceased person via his or her estate, or a trust. Individual accounts are established to meet the clients’ stated goals. These written goals are often referred to as the Investment Policy Statement.
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Question 2 of 10
2. Question
What are the types of accounts available to individual investors?
I. Joint accounts.
II. Transfer-on-death.
III. Trust accounts.
IV. Independent account.
Correct
The types of accounts available to individual investors are as follows:
• Joint accounts
o Tenants in common
o Joint tenants with rights of survivorship
• Transfer-on-death
• Trust accountsIncorrect
The types of accounts available to individual investors are as follows:
• Joint accounts
o Tenants in common
o Joint tenants with rights of survivorship
• Transfer-on-death
• Trust accounts -
Question 3 of 10
3. Question
What is not true in case of TIC accounts, if one owner dies?
Correct
Accounts registered as tenants in common provide fractional ownership for each of the joint owners. When one owner deceases, his or her share in the account does not pass to the surviving owner as with accounts registered as joint tenants with rights of survivorship. The decedent’s share of the account will instead pass to the estate. The division of ownership of TIC accounts does not have to be equal, but should be stated at the time that the account is established. The deceased’s share of the account will be distributed according to his or her will. In the event that either of the account owners die or are declared incompetent by a legal court, all transactions and orders that are not complete must be canceled. These accounts tend to be preferred by investors who desire to combine funds to invest, but do not wish their portion to be left to the other owner.
Incorrect
Accounts registered as tenants in common provide fractional ownership for each of the joint owners. When one owner deceases, his or her share in the account does not pass to the surviving owner as with accounts registered as joint tenants with rights of survivorship. The decedent’s share of the account will instead pass to the estate. The division of ownership of TIC accounts does not have to be equal, but should be stated at the time that the account is established. The deceased’s share of the account will be distributed according to his or her will. In the event that either of the account owners die or are declared incompetent by a legal court, all transactions and orders that are not complete must be canceled. These accounts tend to be preferred by investors who desire to combine funds to invest, but do not wish their portion to be left to the other owner.
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Question 4 of 10
4. Question
What are the features of JTWROS accounts?
I. Upon the passing of one of the owners, the deceased’s share of the account will pass to the surviving owner.
II. Upon the passing of one of the owners, the deceased’s share of the account will pass to the estate.
III. Each owner’s share in a JTWROS account is equal and is not divided.
IV. These accounts are typically preferred by investors in a committed relationship that wish to have their portion of the account pass to the other investor.
Correct
Accounts registered as joint tenants with rights of survivorship are investment accounts that are held by more than one party with the unique characteristic that upon the passing of one of the owners, the deceased’s share of the account will pass to the surviving owner.This differs from accounts registered as tenants in common in which the deceased’s estate retains his or her interest in the account. Each owner’s share in a JTWROS account is equal and is not divided. If one of the owners of the account is declared incompetent by a legal court or passes away, full ownership of the account passes to the surviving tenant. These accounts are typically preferred by investors in a committed relationship that wish to have their portion of the account pass to the other investor, and combine funds to invest out of convenience rather than a desire to invest more effectively with greater capital.
Incorrect
Accounts registered as joint tenants with rights of survivorship are investment accounts that are held by more than one party with the unique characteristic that upon the passing of one of the owners, the deceased’s share of the account will pass to the surviving owner.This differs from accounts registered as tenants in common in which the deceased’s estate retains his or her interest in the account. Each owner’s share in a JTWROS account is equal and is not divided. If one of the owners of the account is declared incompetent by a legal court or passes away, full ownership of the account passes to the surviving tenant. These accounts are typically preferred by investors in a committed relationship that wish to have their portion of the account pass to the other investor, and combine funds to invest out of convenience rather than a desire to invest more effectively with greater capital.
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Question 5 of 10
5. Question
For which type of account a deceased’s account be transferred upon his or her death to the person listed as the beneficiary on the account?
Correct
A registration of transfer-on-death stipulates that a deceased’s account be transferred upon his or her death to the person listed as the beneficiary on the account. While the owner of the account is alive, he or she retains full ownership rights to the account, with the ability to change the beneficiary at any time.
Incorrect
A registration of transfer-on-death stipulates that a deceased’s account be transferred upon his or her death to the person listed as the beneficiary on the account. While the owner of the account is alive, he or she retains full ownership rights to the account, with the ability to change the beneficiary at any time.
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Question 6 of 10
6. Question
What are the features of trust account?
I. They are legal accounts that are owned by a trust that is acting as entity.
II. They are used by investors to simplify the transference of property to beneficiaries after the investor’s death.
III. They simplify the process by allowing the trust to possess ownership of the investment account.
IV. They provide multiple benefits to investors by bypassing probate .
Correct
Trust and estate accounts are managed almost identically. The main difference in the accounts is that estate accounts are set up to manage a deceased person’s estate. Trust accounts are those a legal accounts that are owned by a trust that is acting as entity. Trusts are used by investors to simplify the transference of property to beneficiaries after the investor’s death. Estates that are governed by trusts usually avoid probate court altogether and allow more assets to be passed on by avoiding fees associated with probate court. Trust accounts further simplify the process by allowing the trust to possess ownership of the investment account and name the beneficiary at account registration. Thus, trust accounts provide multiple benefits to investors by bypassing probate (and saving fees associated therewith) and providing an easy method of transference to the beneficiary.
Incorrect
Trust and estate accounts are managed almost identically. The main difference in the accounts is that estate accounts are set up to manage a deceased person’s estate. Trust accounts are those a legal accounts that are owned by a trust that is acting as entity. Trusts are used by investors to simplify the transference of property to beneficiaries after the investor’s death. Estates that are governed by trusts usually avoid probate court altogether and allow more assets to be passed on by avoiding fees associated with probate court. Trust accounts further simplify the process by allowing the trust to possess ownership of the investment account and name the beneficiary at account registration. Thus, trust accounts provide multiple benefits to investors by bypassing probate (and saving fees associated therewith) and providing an easy method of transference to the beneficiary.
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Question 7 of 10
7. Question
What is not true for foundations and charities?
Correct
Even though foundations and charities, as well as other nonprofit organizations, are not seeking to maximize profit as a central organizational aim, they may yet utilize investments for the sake of their funding and growth. Foundations and charities, to the extent that they do not rely on donors, may even depend upon investment returns as crucial to their ongoing activity. This is specially true for foundations. Alternatively, foundations and charities may wish to supplement significant donations with investment returns anyway. In any case, the role of investments to foundations and charities requires an investment adviser to consider how his services could provide value to such nonprofit organizations.
Incorrect
Even though foundations and charities, as well as other nonprofit organizations, are not seeking to maximize profit as a central organizational aim, they may yet utilize investments for the sake of their funding and growth. Foundations and charities, to the extent that they do not rely on donors, may even depend upon investment returns as crucial to their ongoing activity. This is specially true for foundations. Alternatively, foundations and charities may wish to supplement significant donations with investment returns anyway. In any case, the role of investments to foundations and charities requires an investment adviser to consider how his services could provide value to such nonprofit organizations.
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Question 8 of 10
8. Question
What is the most ordinary QDRO allotment?
Correct
Qualified domestic relations orders (QDROs) concern the division of property following a divorce, specifically the division of a retirement plan. A QDRO is a court order based on a divorce settlement which allots a portion of the retirement or pension plan to family members, ordinarily to the accountholder’s ex-spouse but sometimes also to children or dependents. The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the marriage’s inception to the point of divorce. QDROs are important because they also shift tax liability. If an accountholder were simply to distribute a portion of his retirement account to his ex-spouse, the accountholder would still be liable for the taxes, but a QDRO ensures that the ex-spouse would be liable.
Incorrect
Qualified domestic relations orders (QDROs) concern the division of property following a divorce, specifically the division of a retirement plan. A QDRO is a court order based on a divorce settlement which allots a portion of the retirement or pension plan to family members, ordinarily to the accountholder’s ex-spouse but sometimes also to children or dependents. The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the marriage’s inception to the point of divorce. QDROs are important because they also shift tax liability. If an accountholder were simply to distribute a portion of his retirement account to his ex-spouse, the accountholder would still be liable for the taxes, but a QDRO ensures that the ex-spouse would be liable.
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Question 9 of 10
9. Question
What are the features of Sole proprietorships?
I. They are businesses that are owned by an individual business owner.
II. They are businesses that are owned by an group of business owner.
III. Accounts that are established for sole proprietorships are treated as individual accounts.
IV. Joint accounts are established to meet the client’s stated goals.
Correct
Sole proprietorships are businesses that are owned by an individual business owner. Accounts that are established for sole proprietorships are treated as individual accounts, and all issues associated with individual accounts are also associated with the advisor’s fiduciary responsibility to accounts registered as sole proprietorships. Individual accounts are established to meet the client’s stated goals. These written goals are often referred to as the Investment Policy Statement. To ensure that the advisor is meeting the fiduciary duty implicit in the advisor/client relationship, the advisor should review the policy statement to determine whether or not its investments are still in line with the original goals.
Incorrect
Sole proprietorships are businesses that are owned by an individual business owner. Accounts that are established for sole proprietorships are treated as individual accounts, and all issues associated with individual accounts are also associated with the advisor’s fiduciary responsibility to accounts registered as sole proprietorships. Individual accounts are established to meet the client’s stated goals. These written goals are often referred to as the Investment Policy Statement. To ensure that the advisor is meeting the fiduciary duty implicit in the advisor/client relationship, the advisor should review the policy statement to determine whether or not its investments are still in line with the original goals.
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Question 10 of 10
10. Question
Which is not a feature of partnership account?
I. They are businesses founded according to a partnership agreement that sets forth the reasons that the partnership was formed.
II. They are relatively easy to set up and disband, but do not perform well at raising large amounts of capital.
III. Partnerships are attractive to investors that are trying not to manage tax liabilities.
IV. Income and losses pass through the partnerships to the partners, avoiding double taxation.
Correct
Partnerships are businesses founded according to a partnership agreement that sets forth the reasons that the partnership was formed. They are relatively easy to set up and disband, but do not perform well at raising large amounts of capital. Partnerships are attractive to investors that are trying to manage tax liabilities. Income and losses pass through the partnerships to the partners, avoiding double taxation (once to the partnership, and again to the partner). The management of accounts set up for partnerships varies by the type of partnership formed.
Incorrect
Partnerships are businesses founded according to a partnership agreement that sets forth the reasons that the partnership was formed. They are relatively easy to set up and disband, but do not perform well at raising large amounts of capital. Partnerships are attractive to investors that are trying to manage tax liabilities. Income and losses pass through the partnerships to the partners, avoiding double taxation (once to the partnership, and again to the partner). The management of accounts set up for partnerships varies by the type of partnership formed.