Gen Prin: All Other Flashcards

1
Q

Fin Aid. EFC expected family contribution
Memorize %s

A

Assets and income in STUDENT’s name is more punitive.

Student assets 20%
(exc Able under 100k excluded)
Student income 50% of amount above 9,410

Parents assets 5.64%
Parent income 22-47% after deduction protected amount

Home equity and retirement assets NOT count

2 year lookback

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2
Q

Education funding overview

A

See snapshot BIF page

If others will contribute more wait until years three or four

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3
Q

Education. Step 2 education
Interest rate to use
learn shortcut

A

shortcut is Ex. 8 port, 3 ed infl
8-3 / 1.03

((1+Rp) / (1+Ed inflation rate)- 1) *100

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4
Q

Federal securities legislation thru 1940

A

Sec of 1933. Primary markets

Sec of 1934. 2ndary mkts
Also established SEC

Glass-steagall. Created FDIC Separated commercial and investment banking.

Fancy glass buildings separate and insure that money

Maloney act 38. OTC mkts
Over the counter like baloney

Federal bankruptcy act of 1938.
Provides for liquidation of hopelessly troubled firms and provides for reorganization of troubled that might survive

Investment COMPANY act of 1940 Extended security laws to INVESTMENT companies/MUTUAL FUNDS

Investment ADVISORS act of 1940
Advisors must register
Required registration for, and regulated activities of, investment advisors

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5
Q

Federal securities regulation after 1940

A

Mccarran- Ferguson act of 45
Insurance to be regulated at the state level
Remember Karmen’s auto insurance trial in Texas

Securities investors protection act 1970. Est SPIC.. cash up to $250 and up to $500 in securities and cash

Insider trading and securities funds enforcement act of 1988

Gramm Leach Billy act 1999
Privacy info. Remember BG and no meetings in PRIVATE

Us Patriot act of 2001. KYC bc of terrorism money laundering
Requires broker dealers and others to have internal policies procedures controls to meet the end kyc know your customer mandate as an effort against funding terrorism by money laundering

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6
Q

Credit score makeup
List categories and %s

A

CALMN
35% Credit history
30% Amounts owed
15% Length of credit history
10% credit Mix
10% New credit

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7
Q

Credit scores - FICO

A

Below 580 is poor

At these or above
580 fair
670 good
740 very good
800 exceptional
850 max

Or remember 580 then Plus 90 then plus 70 then plus 60

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8
Q

Economy. Expansion and contraction indicators

A

Early expansion
Policy stimulative

Mid
Policy neutral

Late
Policy contractionary

Contraction
Policy eases

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9
Q

Fin Ratios

A

Roa and roe are EAT

Debt to equity is long-term debt

Debt ratio is TOTAL debt to
Total ASSETS

Tie. Ebit/int exp

For below use 120000,10000
Inventory turnover
Cogs/avg inv

Days to sell
365/turnover

See picture for more

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10
Q

Acceptable investments for emergency fund

A

Cash, checking and savings,cds, money market mutual funds, t bills, cash value life insurance, lines of credit

I’m surprised at
home equity loans
Cv life
Takes time to get these

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11
Q

Fin Aid. Grants

A

Pell and FSEOG
Need based
undergrad only

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12
Q

Fin Aid. Direct subsidized loans

A

needs based
undergrad only
USDOE pays interest
- while in school
- 6 months after (grace period)
- and while in deferrment

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13
Q

Fin Aid. Direct UN subsidized

A

NOT needs based
all levels (Grad, undergrad)

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14
Q

Fin Aid. PLUS loans

A

non need, all levels
PLUS is to parent
grad PLUS is to student
CANNOT have adverse credit history
Max = cost of attendance less other fin aid rec’d

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15
Q

Fin Aid. Work study

A

EmployERs must match fed & state $

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16
Q

Able plans (529 Able)
What affects eligibility for public benefits?
How was it UNlike a college 529

A

Eligible if disabled or blind before age 26. Must be on SSI, SSID or have dis cert from a Dr

UNlike 529
Contributions limited to 18k
Only ONE account per person
Elig ind is always BEN and OWNER

Amt over 100k affects eligibility for public benefits
SSDI, SNAP, HUD, FAFSA, Medicare/aid

Can roll 529 college into Able

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17
Q

Fin Aid. Maximize

A

If getting gifts from others, first USE UP students, then parents. B/c you get more aid once your income and assets are down.

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18
Q

Education credit LLC

A

Up to $2,000 PER RETURN
20% of max 10k
Tuition and fees req for att only

NOT refundable (up to 1k of AOC is)

ALL years of post sec ed AND for courses to acquire or improve skills

Do not need to be degree seeking

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19
Q

Education credits. AOC

A

Per student. can have multiple on one return.
Partially refundable (40% up to 1k)
Must NOT have felony drug conviction
Tuition, req fees, and materials needed for course of study (books, computers usually)

PHASEOUT
(Upper Limit - AGI) / phaseout range 20k for MFJ * amount otherwise qualify for NOT max

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20
Q

Exam tip. Education
Don’t “double dip”

A

Select answer that has only ONE tax advantaged account b/c we do not know how much $ and if there is enough for multiple

so if answer has cking, gift, 529. ok
but if cking, gift, 529, AOC - don’t select it UNLESS given amts and know there is enough. CFP checking to see if you know you can’t double dip

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21
Q

College funding

A

MIght not have to do all parts, read carefully.

Step 1. Compute cost of 1st year in future $

Step 2. Compute PV of the 4 years at beg of Year 1.
Set to BGN mode, annual
Rate is adj for ed infl - see sep card
years is 4 or # IN college
PMT is step 1 amount
Compute PV

Step 3. Compute amount to save. watch for annual, monthly, beg or end of period deposits for mode and n
n = years *12 if monthly
FV is the PV you calc in step 2
CPT PMT or PV if lump sum

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22
Q

Coverdell
Income limits
Annual limits
When. Two ages….

A

-Income limits. Phaseout starts at 95/190
-Contribute B4 age 18 or sp needs
- use by age 30
-Limited to 2k/year
-Invest in anything at brokerage vs only mf at 529
-K-12 $ no $ limit and can use for tutoring, uniforms etc

Like 529:
Completed gifts not in donor’s estate
Assets of PARENT for Fin Aid
NQ w/d penalties apply
tuition, fees, books,R&B
Nq dist prorated bw earnings and basis

23
Q

529 college

A

-No income limit
-No age restrictions
-No $ limit and can elect 5 yr superfunding for gift tax
-ONLY MFs allowed for investments (vs coverdell anything in your brokerage)
-Only up to $10k for K-12 (vs coverdell no limit)

24
Q

FDIC ownership category

A

up to 250 per ownership category

Single includes sole prop
Joint per co-owner
Retirement
Corporation, partnership
Revocable trust per ben
Irrevocable trust per noncont ben
Employee benefits
Government officials per official

Remember to take their percentage of those joint ones

25
Bankruptcy
On record 10 years exc ch 13 7 yrs
26
Business cycle
Expansion "recovery" Contraction Most notably what is happening with GDP and unemployment Contraction
27
Early expansion is characterized by
GDP and employment rebound Credit begins to grow Profits grow rapidly Policy is stimulative Inventories are low and sales improve
28
Late expansion
Growth moderates Credit tightens Earnings under pressure Policy contractionary Inventories grow and sales growth falls
29
Contraction
Falling activity Credit dries up Profits decline Policy eases Inventories and sales Fall
30
GDP
Total market value of a country's income and output of goods and services produced by all the people and companies in the US Important because it indicates the pace of growth or decline of the economy relative to history Determines which sectors are over or underperforming Can compare the size and growth rate of economies throughout the world
31
Real GDP
Excludes imports, inflation, transactions were money changes hands but no goods or services are produced, excludes income of US citizens working abroad excludes profits earned by us companies in foreign countries
32
GDP formula
Y=C+I+G+(X-M) C equals consumer spending I investment made by industry G is government spending X is exports M imports Or it might say NE for net exports
33
Law of supply and demand
It's what will CAUSE PRICES to rise or fall If supply is greater than demand prices will fall If demand is greater than supply prices will rise
34
Law of supply
An increase in the price will increase the supply because suppliers are willing to supply to consumers when prices are higher
35
Law of demand Consumer side
Inverse relationship between price and quantity demanded Price goes down quantity demanded goes up
36
Monetary policy Used to influence the demand side
Controls the money supply Influences lending rates May slow down or stimulate the economy Controlled by the Fed. Tools -Discount rate the rate at which member banks borrow from the Fed -Reserve requirement percentage of deposits that must be held on reserve -Open market activities fed buys and sell securities in the open market and also said some margin percent under regulation t Fed goals Maintain sustainable long-term growth Maintain price levels Maintain full employment
37
Supply vs demand
Supply of a particular good depends on Price Cost of production including labor Level of technology Demand depends on Price Prices of other goods especially substitutes Consumers income and tastes
38
FisCal policy
Congress controls Taxation expenditures and debt management Congress goals High employment Sustainable growth Stable prices Tools are spending and taxation
39
Deficit spending
Instead of stimulating the economy it can have the opposite effect through the impact to the bond market
40
Prime rate
When this is an option regarding monetary policy it is most likely wrong It can be influenced by the discount rate but is not set by the Fed
41
Financial statements
Remember that the personal balance sheet has assets at fair market value I think they just give us a balance sheet and a cash flow
42
Home buying ratios
Front end. Mortgage debt servicing ratio Piti\gross income <=28% Back end. Total debt or debt repayment ratio (Piti+other debt)/Gross income <=36% Consumer debt <=20% Non housing debt divided by net income
43
Emergency fund planning
Rules of thumb Two income household the norm is 3 months or 6 months if both are at the same company One income household Norm is 6 months
44
Priority. Rule of thumb
Usually number One financial planning priority is emergency fund Except if young children life insurance and guardianship Or except if you have so much debt you can't save then pay off the debt is priority
45
Consumer credit protection laws
Consumer credit protection act Equal credit opportunity act Fair credit REPORTING act Fair credit BILLING act Fair debt collection practices act
46
Which org oversees all things debt
Consumer financial protection bureau CFPB
47
Mortgage financing
Conventional and FHA do not have funding fees VA and USDA have no down payment and no PMI FHA has PMI for 11 years or life of the loan. What?? USDA has fixed only FHA requires three and a half to 20% down VA has 2.3 to 3.6% funding fees but waived for disabled See picture for conventional VA FHA USDA
48
Mortgage in a case study
Look to reduce years and rates, when possible The argument of taking on the lower monthly payment through a longer or variable rate mortgage and investing the balance makes two huge assumptions The discipline of the investor The return of the investor
49
Mortgage calculations
Make sure that when points rolled into the mortgage balance You account for them in your calculations
50
Financial aid alternatives
Home equity loan Life insurance cash value Qualified plans Defer admission Community college Also see tier 3 Roth ira, traditional ira, mutual funds
51
Risk tolerance questionnaire
Helps to identify the loss aversion bias. Where losses are perceived as more severe than an equivalent gain
52
How are 529 and Coverdell distributions treated for financial aid
They are NOT added back as income on a financial aid application
53
What is an automatic stay And what is halted or not
An order to creditors to halt action It stops foreclosures of property repossessions and sales of property while repayments are made It does not stop child support, alimony or criminal suits Criminal suits are not halted