Book 1 (Mastered) Flashcards
Keywords to look for in Insurance and Contract questions
- Agent vs Broker
- “In writing”
Broker
(“Brokers a deal w/ the insurance companies)
A marketing intermediary between the insurer and the policy owner.
The borker represents the policy owner (the client)
In relation to Agent
Express authority
Implied authority
Apparent authority
Express = written, per insurance company
Implied = public belief implied by indicators (rate books, signage, etc.)
Apparent = negligence of insurance co. to allow the agent to apppear to have authority
Which is correct?
A) John Hobbs, CFP, Registered Investment Advisor
B) John Hobbs, CFP, RIA
A
Investment advisor registration w/ the SEC
2 things
1) Pay initial $150 fee
2) File form ADV/SCH. I each year
Visualize the yield curve & inverted yield curve
What is the leading indicator of inflation?
PPI, which then trickles through into CPI
Scenario
Fed wants to tighten credit because of rising inflation
Monetary policy:
1) Reserve requirements inc.
2) Discount rate inc.
3) Open Market operations SELL
4) Margin rates inc.
General graph of the business cycle
Think of synonyms
PEAK
Recession/Contraction
TROUGH
Recovery/Expansion
Y-Axis: National Output
X-Axis: Time
An indicator that moves in tandem w/ the economy
Ex) Industrial Production
Coincidental indicator
Difference between disinflation & deflation
Disinflation = downward movement of inflated prices (trend)
Deflation = the actual decline in the price of goods & services
A yield curve compares YTM and Yields, assuming the bonds are…
1) Same quality
2) Same taxation
Is the yield curve an economic indicator?
only if its moving
Agent
Legal rep of an insurance company with all 3 authorities
1) Express
2) Implied
3) Apparent (sometimes)
What happens when a client pays down a mortgage principal (not interest)
Net worth increases (decreasing a liability)
FINRA:
Series 6:
Series 7:
Series 63:
Series 65:
Series 66:
Series 6: Mutual funds (open), UIT, VL, variable annuities
Series 7: ALL securities (including close-end MF) (excludes commodities)
Series 63: Meets requirements for other states
Series 65: RIA (State required)
Series 66: Combines 63 & 65 exams
What is the limit and requirement to deduct home equity interest on Sch. A?
Limit: 375k MFS; 750k MFJ
(think, how much the mortgage has left to be paid off)
Requirement: Must be to improve the home
Federal Consumer Protection Laws
3 laws
1) The disclosed APR
2) Right to see credit report
3) Right to be told why credit was denied
Assets valued at…
FMV
The value that a well-informed buyer is willing to accept from a well-informed seller where neither are compelled to buy or sell
Liabilities valued at…
Principal value
Current Ratio
(mainly used to evaluate corps., but may apply to personal financial statements)
Current Assets:
Cash/cash equivalents
Marketable securities
AR
Inventory
Current Liabilities:
Cash owed
AP
Credit card debt
Taxes payable
Current Assets / Current Liabilities
Another word for time deposit
CD
Custodial Accounts opened for minors to enable assets to be held
UGMA/UTMA
To discourage the shifting of income to children in a lower tax bracket as a tax avoidance technique
Kiddie Tax
For testing purposes, take annuity payments or lump-sum for lotto winnings?
Calculate PV of annuities, but, annuity payments mostly likey the answer, as opposed to the lump-sum
What is Form ADV-W?
The closing of the advisory practice
What is the consumer’s liability on stolen credit card transactions?
$50 per credit card
Gifts to UGMA, UTMA, Coverdell, and 529 Plan are of ________ interest
Present
Is a private investment advisor who only accpets insurance companies as clients exempt from filing as an RIA?
Yes
Why can’t an UTMA own EE savings bonds?
It can but it would not receive the tax-deferred benefit, therefore defeating the purpose.
UTMA = Child owned
EE savings bond = Parent owned (>24yrs old)
Monetary Policy activites
1) Reserve requirement
2) Discount rate
3) Open Market Ops.
4) Margin rate
Think: Fiscal = Not Fed
