Fundamentals Flashcards
Chapter 13 Bankruptcy
3
A repayment plan is implemented
Debt payments can be reduced to make more manageable
Debtor is not required to relinquish the assets
Practice Standards
6
EGPRIM
establish
Gather
Analyze
Present recommend
Implement
Monitor
Breadth of the Market
Measures the strength of the market by comparing numbers of advancing versus declining stocks
The insider trading and securities Fraud act 1988
Gave the SEC authority to seek civil penalties against those accused of insider trading
Collateral Source Rule
Person who commits tort is liable even if recovered from insurance
If you commit tort you can’t benefit
Insurance companies can’t benefit either from act of tort
Codes of Ethics
7
FIDOC OC
Fairness
Integrity
Diligence
Objectivity
Competence
Professionalism
Confidentiality
Disclosure in writing
6
Commission
Conflicts of interest
Third parties being used
Services provided
Time of agreement start and end dates
How to end agreement
What are the Life Cycles
Asset accumulation- ages 21-45
Conservation/protection 45-65
Distributing/gifting- 65 plus
529
Contributions are considered a gift
Soft splitting can be applied
5 years forwarding
Coverdell Education Savings
2000 per year per beneficiary
Phase of limits
95-110
190-220
Series EE Bibds
Interest earned is not taxed if used for qualified education expense up to 30,000
Can be used after age 24
Phase out -
76000-91000
113950-143950
Educational accounts subject to kiddie tax
3
UGMA
2503 B
2503 C
Kiddie tax on unearned income greater than 2000 for children less than 19(18) or full time dependent student till 24
PLUS Loans
Not financially based Federal Loans for parents or students(credit checked)
Perkins Loans
Need based
Administrated by University
Graduate and undergraduate
Subsidized Loans
Fiancial needs based
Unsubsidized Stafford Loan
Students that need addition loan amounts
Government pays interest during college years. Students take loan over after
Pell Grants
Federal grant gifted by government for undergraduate school
Federal Supplement Educational Opportunity(SEOG)
Need based program managed by University not the federal government.
American Opportunity Tax Credit
AOTC
For at least half time students parents for first four years of post secondary education
100% first 2000
25% next 2000
Total
1500 if over 4K
PER STUDENT NOT OER FAMILY
Lifetime Learning Credit
Can claim up to 2000 PER FAMILY
can be claimed UNLIMITED NUMBER Of years
The Dow Thoery
Is used to inform the end of a bull or bear market
The Markowitz efficiency Frontier
Measures the highest return given a specific level of risk using Standard deviation
Not Beta
Bankruptcy options
3
Chapter 7- liquidation
Chapter 11- reorganization
Chapter 13- debt adjustment
Premium bonds and their relationship to CR CY and YTM
Current yield > Coupon Rate > YTM
Discount bond
CR < CY < YTM
Bond exception theory is?
Long term interest rates are equal to an average of short term rates over the long term
Liquidity Preference theory
Interest rates reflect the sum of current and expected short term rates plus liquidity(risk) premiums
Private placement
Raising money privately
Eliminates full disclosure and SEC registration
Avoids cost of selling to public
Can raise capital quickly
Higher cost of capital to issuing firm
Registered investment advisors three step test
3
Does the adviser provide analysis or advice concerning securities?
Is the adviser in the business of providing investment advisory services
Does the investment adviser receive compensation for providing investment advisory services
Elasticity
Changes in demand
Not considered an investment company
4
Banks or bank holding companies
Person who’s advice is limited to U.S. government securities
Publishers of bona ride newspapers or financial publications for general and regular circulation
Lawyers whose performance of advisory services is solely incidental to those practice
Information that must be in writing
8
Parties to agreement(who) Duration How terms end Services provided Compensation Conflicts of interest(even certifiable areas of expertise) Outside professionals being used Contact information for certification and their employer
CFP can borrow money if
Client is an immediate family member
Client is an institution in the business of lending
Certificants can lend money if
Client is an immediate family member
If the certificant works for an institution that is in the business of lending money
Notification by Certificant to CFP board
Changes in contact information in 45 days
Crimes 10 days… Alcohol or drugs count
Suspensions 10 days
Forms of discipline by CFP Board enforcing the rules of conduct
Private censure-unpublished written warning mailed to certificant
Public letter of Admonition- published written reproach of behavior
Suspension- for a specific period of time no longer than 5 years. Published or unpublished
Revocation- removed can’t be reinstated
ADV Form
Is filed initially for an RIA with the SEC
Form ADV-W
Is filed when an RIA ceases to operate
Schedule I Form ADV
Is filed annually to let SEC know you are still in business
Form TDF90-22
Is a tax form for foreign institutions
Deflation I often a decline
In money supply
Disinflation
Denotes a decline in the inflation rate
Or a reduction in the rate at which prices rise
Serial payment are different that fixed annuities as their payments
Increase every year
HO 4 policy
Cover tenants personal property against loss or damage and also provides personal liability
NAIC national association of insurance commissioners
50 state commissioners exchange ideas and coordinate regulatory activities
NAIC makes recommendations for legislation and policy
NAIC establishes a solvency policy agenda to strengthen solvency
An investment adviser must provide the ADV II
2
Must proved client with a copy or at least brochures with information in part II of the form ADV
If not delivered it must be deliver 48 hours before entering into the investment advisory contract or else the client has the right to terminate the contract without penalty for a period of 5 business days
The SmL
Is the relationship between rate is return and systematic risk(beta).
Optimal portfolio is tangent to SML
The semi strong hypothesis states
All publicly available information including stock price history is reflected in current stock price.
This makes fundamental analysis not very useful
What is the purpose of an investment policy statement?
2
A written document which establishes the client objectives and lists limitations on the investment manager
Can be used as a basis to measure the managers performance against the stated objectives and constraints
Commingling of clients funds is?
Permitted if it is permitted by law and you have written authorization to do sowing sufficient record keeping
Expansionary fiscal policies
Increase govt spending on foods and services
Increase in tax credits(or anything to help tax payer)
Increase tax rebates
(And example of a monetary policy is federal reserve decrease the reserve requirement)
