WMCP Flashcards: Economics Concepts

To provide a payout that meets the bequest or legacy goal even if the individual dies before saving enough.

Increases permanent income and reduces the savings needed before retirement.

<p>Working in an occupation whose profits are closely tied to interest rates.</p> Signup and view all the answers

<p>An education savings fund that is subject to adjusted gross income (AGI).</p> Signup and view all the answers

<p>No AGI restrictions, making it accessible for high-income individuals.</p> Signup and view all the answers

<p>An IRA from which contributions can be deducted from taxable income.</p> Signup and view all the answers

<p>The percentage of federal income taxes owed divided by taxable income.</p> Signup and view all the answers

<p>To avoid potential tax implications that arise from gifting.</p> Signup and view all the answers

<p>Assets transferred at death get a new basis, tax-free.</p> Signup and view all the answers

<p>A federal tax imposed on the transfer of securities, property, or other assets.</p> Signup and view all the answers

<p>A tax imposed on the transfer of property at death.</p> Signup and view all the answers

<p>Gifts made to qualified organizations that allow the donor to take an income tax deduction.</p> Signup and view all the answers

<p>A universal life policy with a secondary guarantee, remaining in force even if the account value is less than zero.</p> Signup and view all the answers

<p>Insurance that provides protection for an individual's entire lifetime along with tax benefits.</p> Signup and view all the answers

<p>Life insurance protection for a specified period of time.</p> Signup and view all the answers

<p>When the insured has limited income for life insurance</p> Signup and view all the answers

<p>A type of coupon bond that provides payments for an uncertain length of time, without repaying principal upon death.</p> Signup and view all the answers

<p>The ending index divided by the index value at the beginning of the year, minus one.</p> Signup and view all the answers

<p>Insurance that provides additional liability protection beyond standard automobile or homeowner's policies.</p> Signup and view all the answers

<p>Unit Investment Trust.</p> Signup and view all the answers

<p>It measures valuation as a ratio of market capitalization to balance sheet.</p> Signup and view all the answers

<p>$ made from exercising stock from an incentive stock option.</p> Signup and view all the answers

<p>Property that can be transferred automatically to a survivor if titled this way.</p> Signup and view all the answers

<p>It stipulates that policy proceeds shall not be subject to creditor claims of the beneficiary or policyowner.</p> Signup and view all the answers

<p>A tax rule that subjects part of a life policy's death benefit to income taxation if it was previously sold.</p> Signup and view all the answers

<p>A trust that cannot be amended or revoked once established.</p> Signup and view all the answers

<p>Rules that render certain trusts ineffective in shifting income tax burdens if they provide the grantor with certain powers.</p> Signup and view all the answers

<p>Also known as an intentionally defective trust (IDT), it helps reduce transfer taxes and costs.</p> Signup and view all the answers

<p>A trust in which the grantor can change its terms or cancel it at any time during their lifetime.</p> Signup and view all the answers

<p>The US stock market historically performs best.</p> Signup and view all the answers

<p>Key economic variables used by economists to predict future trends in a business cycle.</p> Signup and view all the answers

<p>Measures of economic performance that usually change after real GDP changes.</p> Signup and view all the answers

<p>Economic indicators that change at the same time as changes in overall business activity.</p> Signup and view all the answers

<p>An index like the Dow Jones Industrial Average composed of companies weighted by stock price.</p> Signup and view all the answers

<p>A stock market index where stocks are held in proportion to their aggregate market value.</p> Signup and view all the answers

<p>Fund size and expense ratio.</p> Signup and view all the answers

<p>A model explaining US equity returns based on firm size, book-to-market ratio, and excess return.</p> Signup and view all the answers

<p>Mean is greater than the median.</p> Signup and view all the answers

<p>Risk-free rate + (beta * risk premium)</p> Signup and view all the answers

<p>Control over cash flow timing, certainty of cash flow if held to maturity, greater tax efficiency.</p> Signup and view all the answers

<p>Convenient, affordable diversification and predictable duration.</p> Signup and view all the answers

<p>When the donor has substantial highly appreciated assets.</p> Signup and view all the answers

<p>It is controversial because it should not affect optimal asset allocation.</p> Signup and view all the answers

<p>Inflation-protected securities whose value rises with the CPI-U.</p> Signup and view all the answers

<p>Municipal Rate / (100% - Tax Bracket)</p> Signup and view all the answers

<p>A fund where shares may not be redeemed but traded at varying prices.</p> Signup and view all the answers

<p>An option that results in a loss if exercised immediately.</p> Signup and view all the answers

<p>The price set for calling or putting an asset.</p> Signup and view all the answers

<p>When a stock price is above the strike price.</p> Signup and view all the answers

<p>An option to buy shares of stock at a specified time in the future.</p> Signup and view all the answers

<p>The right to sell an asset at a specified price on or before a set expiration date.</p> Signup and view all the answers

<p>((1 + nominal rate) / (1 - inflation rate)) - 1</p> Signup and view all the answers

<p>The cost of the market basket of a typical urban American family.</p> Signup and view all the answers

<p>Mean is greater than median.</p> Signup and view all the answers

<p>A statistical distribution with a 50% probability of being above or below the average.</p> Signup and view all the answers

<p>Valuation of call options.</p> Signup and view all the answers

<p>A measure of linear association between two variables.</p> Signup and view all the answers

<p>Ranks portfolios by Sharpe ratios, indicating highest expected return for a given level of risk.</p> Signup and view all the answers

<p>The theory that judgment involves fast, efficient strategies and slower, more laborious strategies.</p> Signup and view all the answers

<p>Research can help identify underpriced stocks.</p> Signup and view all the answers

<p>Security prices fully reflect all information from both public and private sources.</p> Signup and view all the answers

<p>All public information is reflected in a stock's current price.</p> Signup and view all the answers

<p>When people draw persistently incorrect conclusions due to inappropriate decision-making rules.</p> Signup and view all the answers

<p>The federal income tax deduction for a charitable contribution valued at 30% of the donor's contribution base.</p> Signup and view all the answers

<p>A federal tax ensuring wealthy individuals and corporations pay some income tax.</p> Signup and view all the answers

<p>Municipal bonds where the funds are used for private enterprises and may be taxable.</p> Signup and view all the answers

<p>An asset transferable to a foundation for a corresponding taxpayer deduction at fair market value.</p> Signup and view all the answers

<p>An asset transferable to a foundation for a taxpayer deduction equivalent to the property basis or fair market value, if lower.</p> Signup and view all the answers

<p>It reduces monthly cash benefits for beneficiaries who exceed allowed annual income.</p> Signup and view all the answers

<p>Average life expectancy multiplied by monthly benefit multiplied by 12 based on earnings.</p> Signup and view all the answers

<p>The decrease in satisfaction from having one more unit of the same product.</p> Signup and view all the answers

<p>They tend to be value companies with lower growth potential.</p> Signup and view all the answers

<p>Companies with historically higher risk-adjusted performance and older, less growth potential.</p> Signup and view all the answers

<p>A preponderance of scores on the low end with more extreme positive returns.</p> Signup and view all the answers

<p>Insurance with guaranteed minimum interest rates, additional interest based on a stock market index.</p> Signup and view all the answers

<p>People are willing to take on risk when facing potential losses and avoid it with potential gains.</p> Signup and view all the answers

<p>A trust where the donor retains income until death, then corpus goes to charity.</p> Signup and view all the answers

<p>An act that allows employers to set up insurance plans and governs most defined contribution plans.</p> Signup and view all the answers

<p>Both employees and employers pay a specific amount into the plan for each participant.</p> Signup and view all the answers

<p>Techniques used to break down barriers to goal achievement through smaller tasks.</p> Signup and view all the answers

<p>Visualizing the goal improves chances of achieving it.</p> Signup and view all the answers