UGBA 135 UPDATED EXAMS PAPER QUESTIONS
AND ANSWERS SURE A+
✔✔Earned Income - ✔✔-money you work for: wage, salary, bonus, tips
-37% is highest tax rate
✔✔Unearned Income - ✔✔taxable interest, ordinary and qualified dividends, business
profits or losses, capital gain or losses, investment, interest on savings accounts,
stocks, benefits
✔✔Total Income - ✔✔Earned + Unearned Income
✔✔AGI - ✔✔Total income - contribution to charity, retirement plan, student loan interest
(tax deductible)
✔✔Capital Gains Tax - ✔✔short term capital gains: for assets owned 12mnths or less,
profit is added to income and taxed at maximum of 37%
long term capital gains: for assets owned >12mnths, profit is subject to max 20% for
singles (taxable income in excess of $425.8k), for married above $479k. below these
income amounts, max 15%. even lower, may be eligible for 0%.
✔✔When do you have to file quarterly estimates of additional taxes? - ✔✔
✔✔What is a standard deduction? - ✔✔a dollar amount you subtract from income
before it is taxed
✔✔Do you need proof/records to substantiate the standard deduction? - ✔✔
✔✔Can you and your parents both claim you for a tax credit? - ✔✔idts
✔✔Stock options - ✔✔-the right to purchase shares or stocks (but not obligated)
, -price of the shares is set by the board of directors of company - set price never
changes
-within a specified period of time (if still employed - usually lasts for 10 years)
✔✔stock grants - ✔✔gifts of stock; many companies have replaced stock options with
grants of the company's stock
most grants are made to executives and managers
granted shares may not be restricted or vested (have met all restrictions and you can
take those shares with you)
✔✔Restricted stock units - how to price - ✔✔
✔✔Exchange Traded Funds (ETFs) - ✔✔-securities that track an index, but trade on an
exchange like a stock
-provide instant diversification
✔✔sector funds - ✔✔like ETFs, but instead track stocks in a specific industry or other
category
✔✔market order - ✔✔best available price at that moment in time for an immediate
purchase or sale of a stock
✔✔market order to buy - ✔✔expect to buy at the ASK price
✔✔market order to sell - ✔✔expect to sell at the BID price
✔✔limit order - ✔✔specific price you set at which you are willing to either buy or sell a
stock
✔✔limit order to buy - ✔✔you set your TOP price you are willing to pay
✔✔limit order to sell - ✔✔you set your LOWEST price you are willing to pay
✔✔# of disciplines - ✔✔11
NEVER borrow money to buy stocks.
Market timing.
It is best to invest in stocks with money you won't need for 5 years.
Identify trends.
Dollar-cost averaging is investing a set amount of money in shares of stock on a regular
time schedule, regardless of the price.
Diversify.
Stage and stagger your purchases.
AND ANSWERS SURE A+
✔✔Earned Income - ✔✔-money you work for: wage, salary, bonus, tips
-37% is highest tax rate
✔✔Unearned Income - ✔✔taxable interest, ordinary and qualified dividends, business
profits or losses, capital gain or losses, investment, interest on savings accounts,
stocks, benefits
✔✔Total Income - ✔✔Earned + Unearned Income
✔✔AGI - ✔✔Total income - contribution to charity, retirement plan, student loan interest
(tax deductible)
✔✔Capital Gains Tax - ✔✔short term capital gains: for assets owned 12mnths or less,
profit is added to income and taxed at maximum of 37%
long term capital gains: for assets owned >12mnths, profit is subject to max 20% for
singles (taxable income in excess of $425.8k), for married above $479k. below these
income amounts, max 15%. even lower, may be eligible for 0%.
✔✔When do you have to file quarterly estimates of additional taxes? - ✔✔
✔✔What is a standard deduction? - ✔✔a dollar amount you subtract from income
before it is taxed
✔✔Do you need proof/records to substantiate the standard deduction? - ✔✔
✔✔Can you and your parents both claim you for a tax credit? - ✔✔idts
✔✔Stock options - ✔✔-the right to purchase shares or stocks (but not obligated)
, -price of the shares is set by the board of directors of company - set price never
changes
-within a specified period of time (if still employed - usually lasts for 10 years)
✔✔stock grants - ✔✔gifts of stock; many companies have replaced stock options with
grants of the company's stock
most grants are made to executives and managers
granted shares may not be restricted or vested (have met all restrictions and you can
take those shares with you)
✔✔Restricted stock units - how to price - ✔✔
✔✔Exchange Traded Funds (ETFs) - ✔✔-securities that track an index, but trade on an
exchange like a stock
-provide instant diversification
✔✔sector funds - ✔✔like ETFs, but instead track stocks in a specific industry or other
category
✔✔market order - ✔✔best available price at that moment in time for an immediate
purchase or sale of a stock
✔✔market order to buy - ✔✔expect to buy at the ASK price
✔✔market order to sell - ✔✔expect to sell at the BID price
✔✔limit order - ✔✔specific price you set at which you are willing to either buy or sell a
stock
✔✔limit order to buy - ✔✔you set your TOP price you are willing to pay
✔✔limit order to sell - ✔✔you set your LOWEST price you are willing to pay
✔✔# of disciplines - ✔✔11
NEVER borrow money to buy stocks.
Market timing.
It is best to invest in stocks with money you won't need for 5 years.
Identify trends.
Dollar-cost averaging is investing a set amount of money in shares of stock on a regular
time schedule, regardless of the price.
Diversify.
Stage and stagger your purchases.
