Who are the key players in a typical mutual fund organization?
> Nichole Whiting is the director of a major charitable organization in Charlotte, North Carolina. A single mother of one young child, she earns what could best be described as a modest income. Because charitable organizations aren’t known for their genero
> Define and differentiate between joint tenancy and tenancy by the entirety. Discuss the advantages and disadvantages of joint ownership. How does tenancy in common differ from joint tenancy?
> Describe briefly the importance of these documents in estate planning: (a) power of attorney, (b) living will, (c) durable power of attorney for health care, and (d) ethical will.
> What is meant by the probate process? Who is an executor, and what is the executor’s role in estate settlement?
> Explain these terms: (a) intestacy, (b) testator, (c) codicil, (d) letter of last instructions.
> How can changes in the provisions of a will be made legally? In what four ways can a will be revoked?
> Describe the basic clauses normally included in a will and the requirements regarding who may make a valid will.
> What is a will? Why is it important? Describe the consequences of dying intestate.
> Briefly describe the steps involved in the estate planning process.
> Describe and discuss each of the techniques used in estate planning.
> Explain the general nature of the federal estate tax. How does the unified tax credit affect the amount of estate tax owed? What is the portability concept?
> Damon Bellamy has worked in the management services division of Niche Consultants for the past five years. He currently earns an annual salary of about $120,000. At 33, he’s still a bachelor and has accumulated about $100,000 in savings over the past few
> Discuss the reasons estate planners cite for making lifetime gifts. How can gift giving be used to reduce estate shrinkage?
> What is a gift, and when is a gift made? Describe the following terms as they relate to the federal gift taxes: (a) annual exclusion, (b) gift splitting, (c) charitable deduction, and (d) marital deduction.
> Explain each of these terms: (a) grantor, (b) trustee, (c) beneficiary, (d) pour-over will, testamentary trust, and (f) irrevocable life insurance trust.
> What is a living (inter vivos) trust? Distinguish between a revocable living trust and in irrevocable living trust.
> What is the right of survivorship? What is community property and how does it differ from joint tenancy with regard to the right of survivorship?
> Discuss the importance and goals of estate planning. Explain why estates often break up. Distinguish between the probate estate and the gross estate.
> Under which procedure will you become fully vested most quickly—cliff or graded vesting?
> Which basic features of employer-sponsored pension plans should you be familiar with?
> What is the earnings test, and how does it affect Social Security retirement benefits?
> Natasha Cormier is a 28-year-old management trainee at a large chemical company. She is single, has an annual salary of $34,000 (placing her in the 15 percent tax bracket), and her monthly expenditures come to approximately $1,500. During the past year o
> What benefits are provided under the Social Security Act, and who is covered?
> How do income needs fit into the retirement planning process?
> Identify and briefly discuss the three biggest mistakes people tend to make when setting up retirement programs.
> How do variable annuity returns generally compare to mutual fund returns? Can you explain why there would be any difference in returns?
> What is a fixed-rate annuity, and how does it differ from a variable annuity?
> What is an annuity? Briefly explain how an annuity works and how it differs from a life insurance policy.
> Under what circumstances would it make sense to convert your traditional IRA to a Roth IRA?
> Describe and differentiate between Keogh plans and individual retirement arrangements. What’s the difference between a nondeductible IRA and a Roth IRA?
> Briefly describe the tax provisions of 401(k) plans and Keogh plans.
> Why is it important to evaluate and become familiar with the pension plans and retirement benefits offered by your employer?
> A couple in their early 30s, Rodney and Carly Madsen recently inherited $90,000 from a relative. Charles earns a comfortable income as a sales manager for System Analytics, Inc., and Carly does equally well as an attorney with a major law firm. Because t
> What is the difference between a profit-sharing plan and a salary reduction, or 401(k), plan?
> Discuss the relationship of retirement planning to financial planning. Do investment and tax planning have a role in retirement planning?
> What’s an international fund, and how does it differ from a global fund?
> What’s the difference between a growth fund and a balanced fund?
> Briefly describe a back-end load, a low load, and a hidden load. How can you tell what kind of fees and charges a mutual fund has?
> What is a 12b-1 fund? Can such a fund operate as a no-load fund?
> What’s the difference between a load fund and a no-load fund?
> What types of ETFs are available to investors?
> What’s the difference between an open-end mutual fund and an ETF?
> Briefly describe the basic structure and investment considerations associated with a REIT. What are the three basic types of REITs?
> Russ Alonzo is 42 years old, single, and works as a designer for a major architectural firm. He is well paid and over time has built up a sizable portfolio of investments. He considers himself an aggressive investor and, because he has no dependents to w
> Describe how the following securities allow investors to participate in the real estate market. a. Stock in real estate–related companies b. Real estate limited partnerships (LPs) or limited liability companies (LLCs)
> Describe the major categories of income property, and explain the advantages and disadvantages of investing in income property. How can a single-family home be used to generate income?
> Why is speculating in raw land considered a high-risk venture?
> Define and briefly discuss the role of each of these factors in evaluating a proposed real estate investment: a. Cash flow and taxes b. Appreciation in value c. Use of leverage
> How important is general market in affecting the price performance of mutual funds?
> Describe how to evaluate the attractiveness of investing in an index-based ETF.
> Which would you rather have: $100 in dividend income or $100 in capital gains distribution? $100 in realized capital gains or $100 in unrealized capital gains?
> Identify three potential sources of return to mutual fund investors, and briefly discuss how each could affect total return to shareholders.
> Briefly describe the steps in the mutual fund selection process.
> Like many married couples, Damian and Brandi Woodson are trying their best to save for two important investment objectives: (1) an education fund to put their two children through college; and (2) a retirement nest egg for themselves. They want to have s
> What are the most common reasons for buying mutual funds?
> What are automatic reinvestment plans, and how do they differ from automatic investment plans?
> What are fund families? What advantages do these families offer investors?
> What’s an asset allocation fund? How do these funds differ from other types of mutual funds?
> What is a mutual fund? Why are diversification and professional management so important to mutual funds?
> Briefly discuss some of the different types of common stock. Which types would be most appealing to you, and why?
> Define and briefly discuss each of these common stock measures: (a) book value, (b) ROE, (c) EPS, (d) P/E ratio, and (e) beta.
> What’s the difference between a cash dividend and a stock dividend? Which would you rather receive?
> From a tax perspective, would it make any difference to an investor whether the return on a stock took the form of dividends or capital gains? Explain.
> What is the desired rate of return, and how would it be used to make an investment decision?
> Dwight Fox is a divorced 40-year-old loan officer at a large regional bank; he has a 16-year-old son. He has decided to use his annual bonus as a down payment on a new car. One Saturday afternoon Dwight visits Unique Motors and buys a new car for $32,000
> What is interest on interest, and why is it such an important element of return?
> Briefly describe the two basic sources of return to investors.
> What is meant by the risk-return trade-off? What is the risk-free rate of return?
> What effects do market interest rates have on the price behavior of outstanding bonds?
> Explain the system of bond ratings used by Moody’s and Standard & Poor’s. Why would it make sense to ever buy junk bonds?
> Describe the conversion privilege on a convertible security. Explain how the market price of the underlying common stock affects the market price of a convertible bond.
> What is a convertible bond, and why do investors buy convertible securities?
> Are junk bonds and zero coupon bonds the same? Explain. What are the basic tax features of a tax-exempt municipal bond?
> What’s the difference between a secured bond and an unsecured bond?
> Go to the asset allocation tool provided at the following internet site: http://www.ipers.org/calcs/AssetAllocator.html Enter assumptions that fit your current and anticipated situation and produce an asset allocation recommendation. Then add 20 years to
> Calvin and Danielle Perkins, ages 30 and 28, were recently married in Kansas City. Calvin is an electrical engineer with Analytical Solutions, a computer component design firm. Danielle has a master’s degree in education and teaches at a local middle sch
> Brad Smitham,, a 53-year-old retail store manager earning $75,000 a year, has worked for the same company during his entire 28-year career. Brad was recently laid off and is still unemployed 10 months later, and his 10 months’ severance pay and 6 months’
> What are DRPs, and how do they fit into a stock investment program?
> Summarize the evidence on the potential cost of being out of the stock market during its best months.
> Describe the various types of risk to which investors are exposed.
> Explain the difference between a bull market and a bear market. Discuss the frequency with which returns as bad as those during 2007–2009 occur. How would you characterize the current state of the stock market?
> Contrast the NASDAQ and National Market System with the OTCBB.
> Describe the operations of the NASDAQ market. Compare it with an exchange, such as the NYSE.
> What are regional exchanges, and what role do they play?
> What is the difference between the broker and dealer markets?
> How does a primary market differ from a secondary market? Where are most securities traded: in the primary or the secondary market?
> What, if anything, can be gained from keeping track of your investment holdings?
> Luis Barillas and his wife, Dora, have been married for two years and have a 1-year-old son. They live in Charlotte, North Carolina, where Luis works for Advanced Marketing Analytics. He earns $3,200 per month, of which he takes home $2,300. Luis and his
> Briefly describe the concept of asset allocation and note how it works.
> What is day trading, and how is it different from the more traditional approach to investing?
> Briefly describe several types of online investment tools, and note how they can help you become a better investor.
> Describe the Internet’s impact on the world of investing.
> Briefly describe the DJIA, S&P 400, S&P 500, NASDAQ Composite, Russell 2000, and Dow Jones Wilshire 5000 indexes. Which segments of the market does each measure track?
> What role do market averages and indexes play in the investment process?
> Briefly discuss the four basic types of information that you, as an investor, should follow.
> What is a short sale? Explain the logic behind it. How much could be gained or lost on a short sale investment?
> Describe how the return on an investment is calculated.
> Name and describe three basic types of orders.
> Walter Burton was a self-employed window washer earning approximately $700 per week. One day, while cleaning windows on the eighth floor of the Commercial Bank Building, he tripped and fell from the scaffolding to the pavement below. He sustained severe
> What is arbitration? Does SIPC require the use of arbitration in investor disputes?
