Fundamentals

Question 1

Registered investment advisor
Exceptions

Answer 1

1. Banks, holding companies- not an inv co
2. Broker/ dealer whose advisory services are solely incidental
3. Lawyers, accountants, teachers, engineers
4. publisher of newspaper/ magazine
5. Advisors who services are related only to securities regulated by the US gov
   Ex Ginny Mae

Question 2

Registered Investment Advisor
Exemptions

Answer 2

Do not need register but ARE subject to ant- fraud provisions

1. Advisors whose clients reside in their state and do not provide advice or services analysis or reports regarding nationally listed security’s
2. Advisors NOT providing advice about securities in a national exchange
3. Advisors whose only clients are
   - insurance companies
   - venture capital funds
   - private funds less than $150 mill
4. Foreign advisors without a place of business in the US

Question 3

GDP is made up of which 4 spending areas

Answer 3

Consumer spending
Government spending
Business investing
Net imports/ exports

Question 4

What is the brochure rule

Answer 4

Requires written disclosure to every client & is fulfilled by providing client with ADV Part 2 (outlines fees) given at or before the time of entering into a contract

• adv services & fees
• types of securities
• EDU & business standards
• conditions for managing accounts

Question 5

Monetary (fed reserve) & Fiscal Policy (congress) three main goals are …

Answer 5

1. Maintain long term economic growth
2. Maintain price levels supported by economic growth
3. Maintain full employment

Question 6

Reverse mortgage

Answer 6

Must be 62+
Doesn’t have other assets
Plans to remain in the home for life

Question 7

Students are considered independent if

Answer 7

Over 23
Have legal dependents
Married

Question 8

Programs to reduce student loans

Answer 8

Pay as you earn repayment
- monthly 10% of discretionary income
- forgiveness after 20 years

Income based repayment (IBR)
- monthly 15% of discretionary income
- forgiveness after 25 years

Income contingent repayment (ICR)
- monthly 20% of discretionary income
- forgiveness after 25 years

Question 9

GGMA/ UTMA taxation

Answer 9

Taxation if unearned income may be subject to Kiddie Tax
- child less than 19: may be taxed using parents tax bracket
- child 19 or older: taxed at child’s rate
EXCEPT: full time student less than age 23 is subject to Kiddie tax

Note UTMA may include real estate

Question 10

Student loan interest

Answer 10

• Is deductible above the line (AGI)
• Limited to $2500
• Must have been used for Education expenses

Question 11

Lifetime Learning Credit

Answer 11

20% up to max of $10k
Maximum credit per family $2000
Phase out limits

Question 12

American opportunity tax credit

Answer 12

First 4 years of post secondary education
100% of first $2k
25% of second $2k
Max credit per student $2500
Phaseout limits

Question 13

Insurance - coinsurance

Answer 13

Requires insured to cover at least a stated percent of property value - usually 80%

If coverage is less than required amount- claim coverage are reduced to greater of ACV or following formula

(Amount of coverage / required amount)
x (loss- deductible)

Question 14

Universal A vs Universal B

Answer 14

A - flexible premium, adj DB, Unbundled
B - same as A except DB vary directly with cash value (DB + cash value)

Question 15

Currently insured

Answer 15

Earned 6 quarters out of the last 13

At death if true spouse with dependents are eligible to claim SS until no dependents (<16 or <18 full time school)

Question 16

Medicare eligibility

Answer 16

65 +
Disabled 2 years

Not need meet SS eligibility to receive Medicare - does need 40 Q to receive SSDI

*need to check card