The essential difference between a 401(k) plan and a 403(b) plan is that:
Answer(s): C
The essential difference between a 401(k) plan and a 403(b) plan is that the 403(b) plan is for employees of specific non-profit organizations whereas the 401(k) plan is for the employees of private corporations. The tax advantages and eligibility requirements of a 403(b) plan are the same as those for a 401(k) plan.
After having been divorced for several years, Mrs. Blended has remarried a man with three children of his own. She has set up a revocable trust in which she deposited funds that she inherited when her mother died, so that the monies will go uncontested to her two biological children in the event of her own death. These two adult children are the only beneficiaries of the trust. Mrs. Blended has no plans to touch any of the money in the trust unless circumstances demand it in the future. The trust is invested in a mutual fund that paid $500 in dividend income and distributed $3,000 in long-term capital gain income to the trust this year.Which of the following statements is true regarding the tax treatment of these distributions?
If Mrs. Blended established a revocable trust that invested in a mutual fund that distributed $3,500 total in dividend and capital gain income this year, Mrs. Blended is responsible for paying taxes on the distributions. Whether or not any monies or assets are withdrawn from a revocable trust, the grantor of the trust-in this case, Mrs. Blended-- is responsible for any taxes due.
NewWave Investments, a family of mutual funds, hires the star of a new motion picture about the workings of Wall Street to provide a testimonial as part of NewWave's new television ad campaign. The actor's financial adviser has, in fact, invested some of the actor's monies in NewWave's funds. NewWave provides the actor with a script in which the actor explains the concept of dollar cost averaging to the viewers. At the conclusion of the actor's explanation, the viewers are informed that the actor has been paid for his testimonial, that his experience may not be representative of that of other clients, and that past performance is no guarantee of future performance. Based on these facts:
Answer(s): D
When NewWave hires an actor who is unlikely to have the knowledge to understand fully the concept of dollar cost averaging to explain it, it has violated a FINRA rule requiring that any testimonial that contains a technical aspect related to investing must be given by someone who has both the knowledge and experience to hold a valid opinion on the topic. The use of testimonials is not prohibited by FINRA, and providers are allowed be paid for their services.
Under the Investment Company Act of 1940, an investment company must:
Under the Investment Company Act of 1940, an investment company must include a statement of its investment policy in its prospectus. It must provide prospective investors with a current prospectus, not its registration statement, when offering shares for sale. It must maintain a minimum net worth of only $100,000, and its board of directors can consist of up to 60% of interested persons.
Which of the following describes a difference between a unit investment trust (UIT) and a mutual fund?
Answer(s): A
The difference between a unit investment trust and a mutual fund is that UITs have a fixednumber of shares; mutual funds do not. Both UITs and mutual funds are required to distribute dividends and capital gains to their shareholders and both may invest in either diversified or non -diversified portfolios.
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