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CFP Review > Fundamentals > Flashcards

Fundamentals Flashcards

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CFP® flashcards
0
Q

Chapter 13 Bankruptcy

3

A

A repayment plan is implemented

Debt payments can be reduced to make more manageable

Debtor is not required to relinquish the assets

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1
Q

Practice Standards

6

A

EGPRIM

establish

Gather

Analyze

Present recommend

Implement

Monitor

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2
Q

Breadth of the Market

A

Measures the strength of the market by comparing numbers of advancing versus declining stocks

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3
Q

The insider trading and securities Fraud act 1988

A

Gave the SEC authority to seek civil penalties against those accused of insider trading

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4
Q

Collateral Source Rule

A

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

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5
Q

Codes of Ethics

7

A

FIDOC OC

Fairness

Integrity

Diligence

Objectivity

Competence

Professionalism

Confidentiality

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6
Q

Disclosure in writing

6

A

Commission

Conflicts of interest

Third parties being used

Services provided

Time of agreement start and end dates

How to end agreement

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7
Q

What are the Life Cycles

A

Asset accumulation- ages 21-45

Conservation/protection 45-65

Distributing/gifting- 65 plus

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8
Q

529

A

Contributions are considered a gift
Soft splitting can be applied
5 years forwarding

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9
Q

Coverdell Education Savings

A

2000 per year per beneficiary

Phase of limits
95-110
190-220

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10
Q

Series EE Bibds

A

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

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11
Q

Educational accounts subject to kiddie tax

3

A

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

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12
Q

PLUS Loans

A

Not financially based Federal Loans for parents or students(credit checked)

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13
Q

Perkins Loans

A

Need based
Administrated by University
Graduate and undergraduate

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14
Q

Subsidized Loans

A

Fiancial needs based

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15
Q

Unsubsidized Stafford Loan

A

Students that need addition loan amounts

Government pays interest during college years. Students take loan over after

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16
Q

Pell Grants

A

Federal grant gifted by government for undergraduate school

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17
Q

Federal Supplement Educational Opportunity(SEOG)

A

Need based program managed by University not the federal government.

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18
Q

American Opportunity Tax Credit

AOTC

A

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

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19
Q

Lifetime Learning Credit

A

Can claim up to 2000 PER FAMILY

can be claimed UNLIMITED NUMBER Of years

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20
Q

The Dow Thoery

A

Is used to inform the end of a bull or bear market

21
Q

The Markowitz efficiency Frontier

A

Measures the highest return given a specific level of risk using Standard deviation

Not Beta

22
Q

Bankruptcy options

3

A

Chapter 7- liquidation

Chapter 11- reorganization

Chapter 13- debt adjustment

23
Q

Premium bonds and their relationship to CR CY and YTM

A

Current yield > Coupon Rate > YTM

24
Q

Discount bond

A

CR < CY < YTM

25
Q

Bond exception theory is?

A

Long term interest rates are equal to an average of short term rates over the long term

26
Q

Liquidity Preference theory

A

Interest rates reflect the sum of current and expected short term rates plus liquidity(risk) premiums

27
Q

Private placement

A

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

28
Q

Registered investment advisors three step test

3

A

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

29
Q

Elasticity

A

Changes in demand

30
Q

Not considered an investment company

4

A

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

31
Q

Information that must be in writing

8

A 
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
32
Q

CFP can borrow money if

A

Client is an immediate family member

Client is an institution in the business of lending

33
Q

Certificants can lend money if

A

Client is an immediate family member

If the certificant works for an institution that is in the business of lending money

34
Q

Notification by Certificant to CFP board

A

Changes in contact information in 45 days

Crimes 10 days… Alcohol or drugs count

Suspensions 10 days

35
Q

Forms of discipline by CFP Board enforcing the rules of conduct

A

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

36
Q

ADV Form

A

Is filed initially for an RIA with the SEC

37
Q

Form ADV-W

A

Is filed when an RIA ceases to operate

38
Q

Schedule I Form ADV

A

Is filed annually to let SEC know you are still in business

39
Q

Form TDF90-22

A

Is a tax form for foreign institutions

40
Q

Deflation I often a decline

A

In money supply

41
Q

Disinflation

A

Denotes a decline in the inflation rate

Or a reduction in the rate at which prices rise

42
Q

Serial payment are different that fixed annuities as their payments

A

Increase every year

43
Q

HO 4 policy

A

Cover tenants personal property against loss or damage and also provides personal liability

44
Q

NAIC national association of insurance commissioners

A

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

45
Q

An investment adviser must provide the ADV II

2

A

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

46
Q

The SmL

A

Is the relationship between rate is return and systematic risk(beta).

Optimal portfolio is tangent to SML

47
Q

The semi strong hypothesis states

A

All publicly available information including stock price history is reflected in current stock price.

This makes fundamental analysis not very useful

48
Q

What is the purpose of an investment policy statement?

2

A

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

49
Q

Commingling of clients funds is?

A

Permitted if it is permitted by law and you have written authorization to do sowing sufficient record keeping

50
Q

Expansionary fiscal policies

A

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)

CFP Review (5 decks)

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