Fundamentals

Question 1

Exceptions to Registration with the SEC (7)

Answer 1

brokers, Lawyers, teachers, engineers who’s advice is solely incidental to their profession
banks, publisher, advisors who only deal with securities guaranteed by the US gov

Question 2

What securities can you sell with series 6 (4 answers)

Answer 2

Mutual funds, UITs, variable life insurance and variable annuities

Question 3

What securities can you sell with series 7

Answer 3

Everything except commodities and futures

Question 4

Exemptions to register with SEC

Answer 4

if advise is pertaining to venture capital funds, insurance companies, private funds less than 150m, advisor in home state, foreign advisors, and securities not on a national exchange
(VIPunder150mFAS)

Question 5

Financial Planning Process

Answer 5

Understanding clients personal & financial circumstances, Identifying and Selecting goals, analyzing current course of action and potential alternatives, developing recommendations, presenting recommendations, implement, monitor & update

Question 6

life insurance bench mark

Answer 6

10-16 x gross pay

Question 7

Disability Benchmark

Answer 7

60-70% of gross pay

Question 8

Personal Liability Umbrella Policy (PLUP) Benchmark

Answer 8

1-3m

Question 9

Housing Ratios

Answer 9

28% PITI/ Monthly gross income
36% PITI+ Recurring Debt / Monthly Gross Income

Question 10

Emergency Fund Benchmark

Answer 10

3-6 months (current assets/ monthly non-discretionary cash flows)

Question 11

Education Fund Benchmark

Answer 11

3k(public school)/6k (semi- private ) /9k (private school) per child per year for 18 yrs

Question 12

Retirement Benchmark

Answer 12

16x pre retirement income
savings- 10-12% of income
return- 8-10% expected
Risk/ Standard Deviation- 8-14%

Question 13

Long Term Care Benchmark

Answer 13

policy that provides daily benefit for nursing home care, home health care, with inflation protection

Question 14

Legacy documents required

Answer 14

Will, durable power of attorney for health care, Advanced Medical Directive.

Question 15

Price Elasticity

Answer 15

measures the change in quantity demanded, relative to changes in price

Question 16

Elastic demand

Answer 16

responds significantly to changes in price

Question 17

Inelastic Demand

Answer 17

quantity demanded changes very little to changes in price (necessities)

Question 18

Recession

Answer 18

6 consecutive months (2 qrtrs) of negative GDP

Question 19

Depression

Answer 19

18 months or (6 qrtrs) of negative GDP

Question 20

Deflation

Answer 20

Prices are falling

Question 21

Disinflation

Answer 21

decline or slowdown in rate of inflation

Question 22

CPI

Answer 22

(consumer price index) measures price change in basket of goods & services in the retail sector

Question 23

PPI

Answer 23

(producer price index) measures price change in whole sale and manufacturing sectors

Question 24

Fed reserve main goals

Answer 24

1. maintain long term economic growth
2. maintain price levels
3. maintain full employment

Question 25

Fed Reserve Tools

Answer 25

1. reserve requirement
2. Discount rate (overnight rate which member banks can borrow from the fed reserve to meet reserve requirements)
3. Open market Operations
4. Excess Reserves

Question 26

Fiscal policy- Congress 3 main goals

Answer 26

1. Maintain economic growth
2. Maintain price stability
3. Maintain full employment

Question 27

FDIC Insurance- Four Types of ownerships

Answer 27

1. Individual accounts
2. Joint accounts
3. Trust accounts (per beneficiary)
   4 Self directed retirement accounts

Question 28

Chater 7 Bankruptcy (relief through liquidation)- what debts are not discharged

Answer 28

1. Student/ government loans
2. 3 years of back taxes
3. Alimony & Child support
4. Money owned due to malicious acts
5. debts related to fraud

Question 29

Chater 7 Bankruptcy (relief through liquidation- what property is exempt from creditors

Answer 29

homestead, life insurance, qualified plans, IRA’s up to 1,512,350, rollover IRA has unlimited protection. NOT INHERITED IRA’S

Question 30

Chapter 11- Bankruptcy

Answer 30

provides relief through reorganization through businesses or self employed

Question 31

Chapter 14- Bankruptcy

Answer 31

provides relief through adjusting debts

Question 32

FICO credit score range and target score

Answer 32

scores range from 350-850. the goal is a 760 or higher

Question 33

Calculate housing ratio- 28%

Answer 33

Monthly housing costs (principal, Interest, Taxes(property), Homeowners insurance) / Monthly gross income

Question 34

Calculate housing and all other debt ratio- 36%

Answer 34

Monthly housing costs (P+I+T+I) + all other recurring debt payments / Monthly Gross income

Question 35

when are students considered independent?

Answer 35

over age 23, married, working on masters/ doctorate, legal dependents, veteran of the US armed forces

Question 36

financial aid programs

Answer 36

federal pell grant, stafford loan, (PLUS) parent loan for undergraduate students, Grad PLUS loan,

Question 37

need based financial aid programs

Answer 37

federal pell grant, subsidized stafford loan,

Question 38

financial aid programs for undergrad only

Answer 38

federal pell grant, PLUS loan,

Question 39

tax advantaged plans for education savings

Answer 39

qualified state tuition plans (prepaid tuition, 529 plan, 529A ABLE), coverdell education savings acc, roth ira,EE bonds, UGMA

Question 40

Asset of parent accounts in determining financial aid

Answer 40

prepaid tuition, 529 savings plan, coverdell (ESA),

Question 41

Details of Life time learning credit

Answer 41

for undergrad or grad, up to 2,00 per year per family, 20% of up to 10k of expenses.

Question 42

Details of American Opportunity Tax Credit

Answer 42

for undergraduate only, up to 2,500 per person per year, 100% of first 2000 of expenses and 25% of second 2000

Question 43

Employer assistance amount excluded from income

Answer 43

an employer can pay or reimburse an employee for education expenses up to 5,250