CFIRS Week 2 Practice Exam solution All Possible Questions and Answers with complete

Which of the following is not taken into account in computing trust accounting income? A. Distributions made to a beneficiary B. Expenses attributable to earnings tax exempt income C. Trustee fees paid from income D. Tax preparation fees paid from income - Answer-Distributions made to a beneficiary In securities lending, the securities should be market to market: - Answer-daily In security lending, the investment of cash collateral is the responsibility of the: a. Borrower. b. Lender. c. Agent bank. d. Broker-dealer. - Answer-agent bank A lender institution offering customer securities on an undisclosed basis is considered: a. The principal. b. The agent. c. The sub-agent. d. The trustee. - Answer-the principal On domestic security loans, the margin requirement is generally: - Answer-102% The asset allocation process leads to a portfolio that - Answer-maximizes investor return for a given level of riskThe least volatile asset allocation listed below is: A. 100% long-term government bonds B. 30% large-cap stocks, 10% internal stocks, 40% treasury bills, and 20% intermediate bonds C. 50% large-cap stocks and 50% long-term government bonds D. 100% large-cap stocks - Answer-30% large-cap stocks, 10% internal stocks, 40% treasury bills, and 20% intermediate bonds A major step in asset allocation is: - Answer-assessing risk tolerance The Grantor Trust rules were added to the 1954 Internal Revenue Code in order to: - Answer-prohibit taxpayers from using trusts to avoid high personal income tax rates At her death, Margaret transferred $2,000,000 to a trust for her grandchildren and $1,000,000 to a trust for her children and grandchildren. She had $1,000,000 remaining GST exemption at death. Her executor used the automatic allocation rules. What is the children's trust's inclusion ratio? - Answer-1 What expenses are NOT shared between principal and income? - Answer-estate and transfer taxes A reasonable portion of indirect expenses (those not attributable to any specific class of income) must be allocated against tax exempt income. The IRS has ruled that the allocation generally should be based on which of the following? - Answer-On all the gross income included in DNI Which of the following is not considered a primary compliance function? - Answer-establishing the audit plan for the internal audit team Which of the following is not a key element of a strong compliance program? - Answer-monthly reviews of the strategic plan by a management consultantWhich of the following does not contribute to setting a proper tone at the top? - Answer-creating incentives that reward employees who focus exclusively on enhancing company revenues and profitability Which of the following is not a key responsibility of the board of directors in setting a proper tone at the top? - Answer-providing expert advice, counsel, and direction on regulatory compliance matters How are income taxes allocated between principal and income? - Answer-taxes attributable to income receipts charged to income, taxes attributable to principal receipts charged to principal