Chapter 5 Practice Questions
- 1. A joint brokerage account owned by two unmarried persons in which the death of one of the owners causes his share of the assets to pass to his estate is referred to as:
- A. Tenancy by the entirety
- B. Joint tenants with rights of survivorship
- C. Joint tenants in common
- D. All of the choices listed
- 2. Within a Uniform Transfers to Minors Act account, assets must be transferred to the minor no later than age:
- A. 18
- B. 21
- C. Depends on the state
- D. 30
- 3. Ellen called her broker from her nuclear bunker on a secure line and is not too crazy about giving out information but would like to open an account. Which of the following is not required to open a new account?
- A. Full name
- B. Date of birth
- C. Social Security number or tax ID
- D. The customer’s signature
- 4. John decides to donate $12,000 worth of stock to his 10-year-old nephew Ralph’s UGMA account. As Ralph gets older, however, Ralph begins to exhibit increasingly irresponsible behavior. John goes to his broker and asks him to remove the stock from Ralph’s custodial account. His broker tells him that:
- A. This is no problem.
- B. The gift of stock cannot be reversed.
- C. Only stock in the amount of the original gift can be removed, and all growth must stay in the account.
- D. The stock can be removed with a court order.
- 5. Josh has decided to open an UGMA account for his 8-year-old daughter. He hopes that when she turns 18, she will use the earnings to pay for college. He has decided that he will be the custodian for the account. Which of the following actions is he permitted to do with the account?
- I. Invest in his friend’s new biotech company.
- II. Give an annual $1,000 contribution to the account.
- III. Withdraw his last contribution from her account because he needs the money to pay for his own dental work.
- IV. Invest a portion of the account into a mutual fund that his investment