Products & Their RisksQuestion 155 of 398
Parents want a tax-advantaged account to save for their child's future college tuition, with tax-free withdrawals for qualified education costs. The most appropriate choice is:
a.An ABLE account
b.A negotiable CD
c.A commercial paper program
d.A 529 college savings plan
Explanation
A 529 plan is designed specifically for education savings, offering tax-deferred growth and tax-free withdrawals for qualified education expenses. An ABLE account is for disability-related expenses, not general college saving, and money-market instruments like CDs or commercial paper provide no education-specific tax benefit. The 529 best fits the stated goal.
Practice all 398 questions free — no signup required.
Related questions on this topic
- An investor in the 32% federal tax bracket is comparing a municipal bond yielding 4% with a corporate bond. The taxable-equivalent yield of the muni is approximately:
- A single manufacturer's stock drops after the company loses a major product-liability lawsuit. This loss is an example of:
- A client wants a government-backed security whose cash flow comes from homeowners' monthly mortgage payments and carries the full faith and credit of the U.S. government. The best fit is:
- A U.S. investor buys a bond denominated in euros. The euro then falls sharply against the dollar. The investor has been hurt primarily by:
- An investor in a GNMA pass-through security is most exposed to prepayment risk when:
- An investor must sell a thinly traded, small-issue municipal bond quickly but can only find a buyer at a price well below fair value. This illustrates:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review