Final Push Flashcards
Draw the Gifted Securities Cost basis Diagram
draw it
If Question gives you the Beta, Market Return, and 90 Tbill then asks you to calculate the Expected Return whats the process
1) Market Return - 90 Tbill
2) that return plugged into beta/ Alpha equation
3) add 90 Tbill back into the Beta / Alpha return
Can BD have a list of securities approved for use?
Can Agents of BD use that list without doing their own suitability check because the BD has already done it?
Yes - its just a list of securities not actual investment advice
No - Agent must do their own suitability
Gifting limit before a gift tax is occurs
17k/yr
34k/yr if married
this is a tax on the person receiving the gift not the one giving it
If a married couple wants to give money to their son and his wife how much can they give before a gift tax occurs?
68k/yr
because both parties are married its 17k x4
which index is price-weighted?
how are most others weighted?
which one’s focus is more likely on Mid-cap companies?
Dow Jones (30 companies)
most others are weighted by market cap not price
S&P 400
Difference between:
-Investment Constraint
-Investment Goal
-Capital Need
-Financial Objective
-Investment Constraint- “I do not want to any oil companies”
-Investment Goal- “I want to fund my kid’s college” - has to be uncertain if you will attain it or not
-Capital Need- “I Need $_____ dollars, WHERE am I going to get it” - focused on how to fund it
-Financial Objective - “I want to be able to retire with 200k/yr in income” - more $ specific than an investment goal
to determine if something had MArket risk or business risk ask yourself…
WHY did the companies stock go down?
if because of a market crash = market risk
if anything related to that individual company = business risk
Define:
-Hypothecation Agreement
-Credit Agreement
-Loan Consent Agreement
-Interest Computation Agreement
and which of these is required for opening a Margin account?
-Hypothecation Agreement - Agree to let BD use your equity for “hypothetical” collateral for bank loan
-Credit Agreement - Agree to get a loan for $
-Loan Consent Agreement - Agree to let others borrow your stock for their Short Sells
-Interest Computation Agreement - Explains how interest on the Loan is being charged IS A PART OF THE CREDIT AGREEMENT
Required for Margin account:
-Hypothecation Agreement
-Credit Agreement
-Interest Computation Agreement (sort of the credit agreement is required and this is a part of that not its own agreement)
when calculating Alpha on the exam should you use the 90 day T-Bill
if they provide it in the question then yes!!!
(subtract the tbill from the market and portfolio return then solve for Alpha)
Do open or closed end funds have Intra-day price changes
Only Closed End
(open end funds NAV is calculated at the end of the day whereas Closed end price is determined byt he market)
difference between
iBonds
and
i Shares
iBonds - bonds linked to inflation, pay a fixed coupon, 10 yr term (the corporate version of TIPS)
iShares - institutional open end funds, 250k minimum to enter
Which CMO’s pay monthly interest?
GNMO’s only
(maybe Sally Mae but that changed awhile ago and only true if the test is outdated)
Are ETN’s / ETF’s registered
Investment Companies
ETN - NO
ETF - Yes
Are ETN’s / ETF’s considered Alternative Investments?
Yes to BOTH
Taxes in a revocable trust are usually paid by who?
what about irrevocable trust
the Grantor
what about irrevocable trust - the trust itself (its way more complicated than that and probably not on the test)
Does UGMA/UTMA’s custodian have to
be a guardian?
get permission from the guardian?
neither,
The account is opened in the name of the minor with the minor’s Social Security number and the name of the adult listed as custodian. Thats IT
Are speculative options strategies allowed in a IRA?
No
but covered calls would be because they are not speculative
(basically uncovered calls are not allowed but covered calls are)
if married person inherits Stock from their deceased spouse do they still get the step up in cost basis even though they were married?
YES
Changes to IA Brochure means the brochure or a summary of the changes must be delivered to all current clients within what time frame?
within 120 days of the end of the adviser’s fiscal year.
arithmetic mean
the simple average
Unless something else is specified, whenever the mean return is referenced, it is always the arithmetic mean
which exempt issuer is only exempt if they are authorized to do business in the state.
Savings and Loan
and
Building and Loan
remember Capital Gains and Long Term Capital Gains are 2 different things
remember Capital Gains and Long Term Capital Gains are 2 different things
Risk Premium
the portion of total return that was acquired through risk
Total Return - Risk Free Return(the 90 day t bill)
Registered Person Withdraws their registration
When does withdrawal become effective?
Admin can begin disciplinary actions for any violations on the person within what time frame
Effective date may be delayed IF
Effective - 30 days after filing the withdrawal
Admin - within 1 year from effective date of withdrawl (not when they filed but when it was effective)
Delayed IF - Admin initiates disciplinary action within the 30 day filing window
Would An offer or sale to a Broker Dealer be considered
exempt from the registration and advertising filing requirements?
(under the USA - state law -)
Yes
Do Federally Registered IA’s have to notify state Admin’s of their federal registration?
Yes
in each state where they have an office.
(they have to NOTIFY them NOT Register with them)
ARe Agents of Broker Dealers allowed to file an application to register a security’s offering
No
only the BD acting on behalf of the issuer
Are the earnings portion of Withdrawls from a NQ annuity taxed as Long term capital gains or taxable income?
taxable income. Annuities grow tax deffered which means its taxed as ordinary income when withdrawn (only the earnings not the contributions and its on a LIFO basis)
There is never a capital gain with a variable annuity
is there a tax penalty for taxing NQ annuity distribution before 59 1/2?
YES
How frequently are the following on a Variable Life Policy calculated:
Unit values
Policy cash values
Death benefit
Unit values - Daily
Policy cash values - Monthly
Death benefit - Annually
which Index is for small Cap companies
Russell 2000
(its tracks 2000 small cap companies)
what form of portfolio management
rotates between sectors according to the business cycle
sector rotation
(NOT Tactical Managment)
if a client goes to school or does a resident MBA program in another state, does BD IA IAR agent need to register in that state to keep working with them?
NO
going to school or doing a residency program in another state does not make that individual change the state they are a resident of.
Which Derivitives can be bought on Margin?
Warrants
and
LEAPS
