## Refinance Payment Calculation

Evan refinanced his home mortgage to a 30-year fixed mortgage with monthly payments. How much is each payment if he owed \$250,000 at the time of the refinance and the interest rate is 7%? \$891 \$1,211 \$1,459 \$1,663 CLICK TO REVEAL ANSWER Expand D is the answer. Evan pays his mortgage every month which means…

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## Calculating Realized Compound Yield on a Bond

An investor bought a bond at par that matures in 15 years. The bond pays an annual coupon of \$130 and the reinvestment rate is 9%. What is the realized compound yield of this bond? 10.21% 11.48% 13.00% 14.10% CLICK TO REVEAL ANSWER Expand A is the answer. One would anticipate a realized compound yield…

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## Tax Saving Strategies

Dan and Karen Burles have 2 children, Coy (age 12, student) and Roger (age 21, student). Dan and Karen own a security equipment sales and installation business, an LLC. Dan and Karen are in the highest income tax bracket. They have a portfolio with \$130,000 of municipal bonds (annual income \$5,200), \$80,000 of corporate bonds…

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## Possible Penalties on Tax Return

Terry received a notice from the IRS correcting a math error on his individual income tax return. As a result, Terry owes \$1,000 in taxes, penalties and interest. Which of the following is the most likely penalty or interest assessed against Terry? Understatement penalty Failure to file penalty Fraud penalty Underpayment penalty CLICK TO REVEAL…

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## Owner of a Grantor Trust

In which of the following situations would the grantor of a trust not be considered the owner? The grantor has a reversionary interest in the trust, of which the grantor’s son is the sole beneficiary, but the grantor cannot exercise this power until eight years after transfer of property to the trust. The grantor retains…

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## OASDI Disability Income Benefits

Which of the following statements concerning OASDI disability income benefits is correct? Disability is defined as the inability to perform all major duties of the insured’s own occupation. Unless specifically exempted, a waiting period of 12 months must be satisfied. If the disabled worker is also receiving workers compensation benefits, the full OASDI benefit is…

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## Underinsured Dwelling Penalty

Sam carries an H0-3 policy with \$500,000 of coverage and a \$2,000 deductible. It would cost \$700,000 to rebuild Sam’s house. How much will his insurance company pay on a \$200,000 claim related to a fire that started in Sam’s kitchen? \$176,571 \$178,571 \$231,235 \$198,000 CLICK TO REVEAL ANSWER Expand A is the answer. Frank…

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## Selecting an Appropriate Trust

Which of the following trusts should Jason establish in his Will to provide for his son Gaven’s living expenses until Gaven reaches age 65 if Gaven is currently a 30-year old unemployed aspiring actor? 2503(b) trust 2503(c) trust Crummey trust Totten trust CLICK TO REVEAL ANSWER Expand A is the answer.  The 2503(b) trust would…

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## Refinance Payment Calculation

Sharon refinanced her home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if she owed \$150,000 at the time of the refinance and the interest rate is 6%? \$415 \$589 \$691 \$702 CLICK TO REVEAL ANSWER Expand A is the answer. Sharon pays her mortgage every two weeks which…

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## Using Jensen Performance Index

Based on the Jensen performance index, which fund should the investor continue to hold given the following information? Fund 1 Fund 2 Return on Portfolio 13% 17% Beta .95 1.02 Standard Deviation .18 .22 Risk free rate of return is 7% Market return is 15% Fund 1 Fund 2 Both Fund 1 and 2 Neither…

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