Series 51: Chapter 2 Practice Questions

Chapter 2 Practice Questions

1. 1. If the beneficiary of a 529 college savings plan dies, the contributor can do any of the following except:
2. A. Distribute the funds to the beneficiary’s estate, which would subject the funds to estate taxation
3. B. Return the funds to himself, with earnings subject to tax, but incurring no penalty fee
4. C. Rollover the plan by designating a new beneficiary who is a qualified family member, tax-free
5. D. Use the account as security for a loan to benefit the beneficiary’s estate
6. 2. All of the following are qualified education expenses except:
7. A. Tuition
8. B. Services for special needs students
9. C. Books
10. D. Room and board for all students
11. 3. A 529 college savings plan can be opened through:
12. A. An authorized investment firm, often referred to as an advisor-sold plan
13. B. The state or its primary distributor, often referred to as a direct-sold plan
14. C. A selling dealer, a municipal securities dealer other than the state’s primary distributor
15. D. All of the above
16. 4. Municipal fund securities are distinguished from mutual funds by their:
17. A. Sellers
18. B. Issuers
19. C. Investors
20. D. All of the above
21. 5. Which one of the following statements about LGIPs is true?
22. A. Anyone can invest in an LGIP by purchasing a share.
23. B. If an LGIP is managed by government employees, MSRB disclosures are not required.
24. C. Although LGIPs are issued by state or local governments, federal law establishes LGIP requirements and investment objectives.
25. D. Withdrawals from LGIPs are only allowed for qualified educational expenses.
26. 6. Which of the following is typically not a benefit of an LGIP?
27. A. Diversification
28. B. Liquidity
29. C. High returns
30. D. Exemption from federal taxation
31. 7. Which of the following investments has the broadest set of p