1. The percentage change in price with a 1.5% rise in the market rate of interest for a
bond with a duration of 5.0 years is - CORRECT ANSWERS-duration x change in mkt
int rate
1.5 x 5= -7.5
10 essential health benefits that must be covered by all health insurance policies under
PPACA - CORRECT ANSWERS-1. out patient care
2. emergency services
3. hospitalization
4. maternity and newborn care
5. mental health and addiction treatment
6. prescription drugs
7. rehab services and devices
8. lab services
9. preventive services
10. pediatric service
10 factors that must be considered before annuity purchase reco - CORRECT
ANSWERS-1) age
2) annual income
3) financial situation, experience, and objectives
4) intended use of annuity
5) financial horizon
6) existing assets (investments and insurance)
7) liquidity need
8) current liquid net worth
9) risk tolerance
10) tax status
10. Carla is collecting $600 per month from a government pension and is also receiving
a Social Security spousal benefit of $500 per month. Due to the GPO, her Social
Security spousal benefit will be reduced to ____________. - CORRECT ANSWERS-
,Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400.
$500 - $400 = $100.
10. Carla is collecting $600 per month from a government pension and is also receiving
a Social Security spousal benefit of $500 per month. Due to the GPO, her Social
Security spousal benefit will be reduced to ____________. - CORRECT ANSWERS-
Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400.
$500 - $400 = $100.
11. David began receiving Social Security benefits in June 2015. He later learned that
he should have delayed receipt of his benefits until a later age. He has until _______ to
pay back all payments and refile for increase benefits at a future date. - CORRECT
ANSWERS-Claimants have 12 months from the date they filed their original claim to
pay back all payments, and they can then refile for increased benefits at a later date.
11. David began receiving Social Security benefits in June 2015. He later learned that
he should have delayed receipt of his benefits until a later age. He has until _______ to
pay back all payments and refile for increase benefits at a future date. - CORRECT
ANSWERS-june 2016
Claimants have 12 months from the date they filed their original claim to pay back all
payments, and they can then refile for increased benefits at a later date.
12. Which one of the following generally represents the basis of stock acquired by gift, if
the fair market value on the date of gift is less than the donor's basis? - CORRECT
ANSWERS-This is generally a correct description of the basis in the hands of the
donee. The basis of stock acquired by gift will be the fair market value on the date of the
gift, unless the donor's basis is less than this fair market value and vice versa.
***Lesser of donor's basis or FMV at date of gift
20. On average, Social Security represents ______ of the income of the elderly. -
CORRECT ANSWERS-38%
21. Tom, 59, is a widower and is receiving a widower's benefit on his deceased
spouse's record. Tom is considering getting remarried. As a planner, you should
suggest which one of the following? - CORRECT ANSWERS-wait until 60 to remarry
If you remarry before the age of 60, your widower's benefit will be terminated. If you are
over the age of 60 when you remarry, your marriage will not affect your Social Security
widower's benefit.
24. Periodic distributions from a qualified plan that take place over _____ years may not
be rolled over into an IRA. - CORRECT ANSWERS-10
24. Periodic distributions from a qualified plan that take place over _____ years may not
be rolled over into an IRA. - CORRECT ANSWERS-Periodic distributions from a
,qualified plan that take place over nine years may be rolled over into an IRA. However,
periodic distributions from a qualified plan that take place over a period of 10 years or
more cannot be rolled over into an IRA.
25. Sam, age 62, begins receiving his Social Security income. His PIA is $1,500 per
month. Because he has filed at age 62, his payment will be reduced by 25% to $1,125.
His wife Linda, age 67, would like to begin spousal benefits. Her monthly income would
be - CORRECT ANSWERS-Because Linda has attained FRA, she would be eligible for
50% of Sam's PIA, or $750.
25. The distribution strategy that strives to mitigate sequence of returns risk by
segmenting a portfolio according to when the funds will be needed is referred to as -
CORRECT ANSWERS-the bucket strategy
26. How are Social Security benefits funded? - CORRECT ANSWERS-Social Security
and FICA taxes are withheld by the employer. The total is 15.3% of payroll in 2016; the
employer pays 7.65% and the employee pays 7.65%. Benefits are not paid by income
taxes, and there is no trust fund. Monies are deposited into the general account, and
benefits are paid out of the general account.
27. It is January 15, 2016. Janet is a successful architect and her spouse, Tom, has
always worked as a part-time barista. Janet and Tom, both age 66, want to maximize
their Social Security benefits by using the file and suspend strategy. You should advise
them that - CORRECT ANSWERS-The spouse who wants to file and suspend, typically
the higher wage earner, must be 66 before May 2016 and must file and then suspend
their benefits before the April 30, 2016, deadline. Effective May 1, 2016, this option will
no longer be available, although those who were already employing this strategy will be
grandfathered in and don't need to refile.
27. Under value investing, if an investor desired to increase his or her investment by
$1,000 per month and the asset value had declined by $250 from the previous month,
the investor would invest ______ the next month, assuming the price of the investment
did not change. - CORRECT ANSWERS-1250
29. An individual that would like to utilize the Social Security "restricted application"
strategy must have attained age 62 by which one of the following dates? - CORRECT
ANSWERS-December 31, 2015
3. The maximum contribution to a longevity annuity is - CORRECT ANSWERS-25% of
an individual's retirement plan or $125,000, whichever is less.
4 key policy features to consider in selecting an LTC policy - CORRECT ANSWERS-1.
elimination (or waiting) period before which benefits are paid
2. maximum benefit period
3. the daily benefit
4. inflation protection
, 43. Which type of life insurance below is referred to as "pure" life insurance? -
CORRECT ANSWERS-Term life
49. Frank Gorman, age 45, worked for 15 years for Bracket Manufacturing Company.
Three years ago, he suffered an accident while commuting to work and was totally and
permanently disabled. After a lengthy hospital stay, Frank applied for and began
receiving Social Security disability benefits on January 1, 20X1. When will Frank
become eligible for Medicare Part A? - CORRECT ANSWERS-Individuals must be
totally and permanently disabled (satisfy Social Security's definition of disability) and
have received Social Security disability benefits for 24 months to be eligible for
Medicare Part A.
54. In order to be considered a "qualified" policy, a long-term care policy must -
CORRECT ANSWERS-To be classified as a qualified policy, cognitive impairment must
be covered, it must provide for nonforfeiture options, and it must be guaranteed
renewable and conform to the National Association of Insurance Commissioners Model
Act. It cannot include a determination of medical necessity by a physician nor can it
include return of premium.
6 gaps in medicare coverage - CORRECT ANSWERS-1. deductibles for part A ($1288
for inpatient hospital care) Part B ($166)
2. cost of extended hospitalization under part A (322 per day for 61st-90th day, 644 per
day for 91st-150th day, full cost after 150th day)
3. Coinsurance 20% on doctors services and out patient care
4. costs in excess of medicare part b approved charges
5. most self administered prescription drugs
6. nursing home costs
7. When must the designated beneficiary be determined in order to avoid having to
distribute the full IRA balance under the 5-year rule? - CORRECT ANSWERS-
September 30 of the year following the participant's death.
8. Spousal benefits can be claimed as early as age ______. - CORRECT ANSWERS-
62
80. What is the tax treatment for a shareholder participating in a common stock's
dividend reinvestment program? - CORRECT ANSWERS-The shareholder is treated as
if he or she received a cash dividend equal to the fair market value of the shares
purchased under the plan.
84. The valuation date for gifts is - CORRECT ANSWERS-the date of completion of the
transfer of the gift
84. The valuation date for gifts is - CORRECT ANSWERS-the date the transfer is
complete
bond with a duration of 5.0 years is - CORRECT ANSWERS-duration x change in mkt
int rate
1.5 x 5= -7.5
10 essential health benefits that must be covered by all health insurance policies under
PPACA - CORRECT ANSWERS-1. out patient care
2. emergency services
3. hospitalization
4. maternity and newborn care
5. mental health and addiction treatment
6. prescription drugs
7. rehab services and devices
8. lab services
9. preventive services
10. pediatric service
10 factors that must be considered before annuity purchase reco - CORRECT
ANSWERS-1) age
2) annual income
3) financial situation, experience, and objectives
4) intended use of annuity
5) financial horizon
6) existing assets (investments and insurance)
7) liquidity need
8) current liquid net worth
9) risk tolerance
10) tax status
10. Carla is collecting $600 per month from a government pension and is also receiving
a Social Security spousal benefit of $500 per month. Due to the GPO, her Social
Security spousal benefit will be reduced to ____________. - CORRECT ANSWERS-
,Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400.
$500 - $400 = $100.
10. Carla is collecting $600 per month from a government pension and is also receiving
a Social Security spousal benefit of $500 per month. Due to the GPO, her Social
Security spousal benefit will be reduced to ____________. - CORRECT ANSWERS-
Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400.
$500 - $400 = $100.
11. David began receiving Social Security benefits in June 2015. He later learned that
he should have delayed receipt of his benefits until a later age. He has until _______ to
pay back all payments and refile for increase benefits at a future date. - CORRECT
ANSWERS-Claimants have 12 months from the date they filed their original claim to
pay back all payments, and they can then refile for increased benefits at a later date.
11. David began receiving Social Security benefits in June 2015. He later learned that
he should have delayed receipt of his benefits until a later age. He has until _______ to
pay back all payments and refile for increase benefits at a future date. - CORRECT
ANSWERS-june 2016
Claimants have 12 months from the date they filed their original claim to pay back all
payments, and they can then refile for increased benefits at a later date.
12. Which one of the following generally represents the basis of stock acquired by gift, if
the fair market value on the date of gift is less than the donor's basis? - CORRECT
ANSWERS-This is generally a correct description of the basis in the hands of the
donee. The basis of stock acquired by gift will be the fair market value on the date of the
gift, unless the donor's basis is less than this fair market value and vice versa.
***Lesser of donor's basis or FMV at date of gift
20. On average, Social Security represents ______ of the income of the elderly. -
CORRECT ANSWERS-38%
21. Tom, 59, is a widower and is receiving a widower's benefit on his deceased
spouse's record. Tom is considering getting remarried. As a planner, you should
suggest which one of the following? - CORRECT ANSWERS-wait until 60 to remarry
If you remarry before the age of 60, your widower's benefit will be terminated. If you are
over the age of 60 when you remarry, your marriage will not affect your Social Security
widower's benefit.
24. Periodic distributions from a qualified plan that take place over _____ years may not
be rolled over into an IRA. - CORRECT ANSWERS-10
24. Periodic distributions from a qualified plan that take place over _____ years may not
be rolled over into an IRA. - CORRECT ANSWERS-Periodic distributions from a
,qualified plan that take place over nine years may be rolled over into an IRA. However,
periodic distributions from a qualified plan that take place over a period of 10 years or
more cannot be rolled over into an IRA.
25. Sam, age 62, begins receiving his Social Security income. His PIA is $1,500 per
month. Because he has filed at age 62, his payment will be reduced by 25% to $1,125.
His wife Linda, age 67, would like to begin spousal benefits. Her monthly income would
be - CORRECT ANSWERS-Because Linda has attained FRA, she would be eligible for
50% of Sam's PIA, or $750.
25. The distribution strategy that strives to mitigate sequence of returns risk by
segmenting a portfolio according to when the funds will be needed is referred to as -
CORRECT ANSWERS-the bucket strategy
26. How are Social Security benefits funded? - CORRECT ANSWERS-Social Security
and FICA taxes are withheld by the employer. The total is 15.3% of payroll in 2016; the
employer pays 7.65% and the employee pays 7.65%. Benefits are not paid by income
taxes, and there is no trust fund. Monies are deposited into the general account, and
benefits are paid out of the general account.
27. It is January 15, 2016. Janet is a successful architect and her spouse, Tom, has
always worked as a part-time barista. Janet and Tom, both age 66, want to maximize
their Social Security benefits by using the file and suspend strategy. You should advise
them that - CORRECT ANSWERS-The spouse who wants to file and suspend, typically
the higher wage earner, must be 66 before May 2016 and must file and then suspend
their benefits before the April 30, 2016, deadline. Effective May 1, 2016, this option will
no longer be available, although those who were already employing this strategy will be
grandfathered in and don't need to refile.
27. Under value investing, if an investor desired to increase his or her investment by
$1,000 per month and the asset value had declined by $250 from the previous month,
the investor would invest ______ the next month, assuming the price of the investment
did not change. - CORRECT ANSWERS-1250
29. An individual that would like to utilize the Social Security "restricted application"
strategy must have attained age 62 by which one of the following dates? - CORRECT
ANSWERS-December 31, 2015
3. The maximum contribution to a longevity annuity is - CORRECT ANSWERS-25% of
an individual's retirement plan or $125,000, whichever is less.
4 key policy features to consider in selecting an LTC policy - CORRECT ANSWERS-1.
elimination (or waiting) period before which benefits are paid
2. maximum benefit period
3. the daily benefit
4. inflation protection
, 43. Which type of life insurance below is referred to as "pure" life insurance? -
CORRECT ANSWERS-Term life
49. Frank Gorman, age 45, worked for 15 years for Bracket Manufacturing Company.
Three years ago, he suffered an accident while commuting to work and was totally and
permanently disabled. After a lengthy hospital stay, Frank applied for and began
receiving Social Security disability benefits on January 1, 20X1. When will Frank
become eligible for Medicare Part A? - CORRECT ANSWERS-Individuals must be
totally and permanently disabled (satisfy Social Security's definition of disability) and
have received Social Security disability benefits for 24 months to be eligible for
Medicare Part A.
54. In order to be considered a "qualified" policy, a long-term care policy must -
CORRECT ANSWERS-To be classified as a qualified policy, cognitive impairment must
be covered, it must provide for nonforfeiture options, and it must be guaranteed
renewable and conform to the National Association of Insurance Commissioners Model
Act. It cannot include a determination of medical necessity by a physician nor can it
include return of premium.
6 gaps in medicare coverage - CORRECT ANSWERS-1. deductibles for part A ($1288
for inpatient hospital care) Part B ($166)
2. cost of extended hospitalization under part A (322 per day for 61st-90th day, 644 per
day for 91st-150th day, full cost after 150th day)
3. Coinsurance 20% on doctors services and out patient care
4. costs in excess of medicare part b approved charges
5. most self administered prescription drugs
6. nursing home costs
7. When must the designated beneficiary be determined in order to avoid having to
distribute the full IRA balance under the 5-year rule? - CORRECT ANSWERS-
September 30 of the year following the participant's death.
8. Spousal benefits can be claimed as early as age ______. - CORRECT ANSWERS-
62
80. What is the tax treatment for a shareholder participating in a common stock's
dividend reinvestment program? - CORRECT ANSWERS-The shareholder is treated as
if he or she received a cash dividend equal to the fair market value of the shares
purchased under the plan.
84. The valuation date for gifts is - CORRECT ANSWERS-the date of completion of the
transfer of the gift
84. The valuation date for gifts is - CORRECT ANSWERS-the date the transfer is
complete
