General Principals Flashcards
An airline experienced a midair engine explosion in 2019 and killed a passenger. Immediately after the carrier experienced a sharp decline in ticket sales and the firm missed $50mm in sales. What is this an example of?
Heuristics - mental shortcuts that helps people understand the world by using info that is easy to recall.
Dr Walters age 64, wants to retire next yr. He would like a retirement projection. He is asking for an unrealistic retirement income payout based on all his usable assets. In order to meet his projections , you will have to use very high return assumptions. What should a CFP do?
Run the projections only using realistic expectations.
Client provides a current personal balance sheet to the CFP professional during the initial data gathering meeting. This financial statement will enable the planner to gain an understanding about all of the following except:
A) Diversification of the clients’ s assets
B) amount of the clients cash flow
C) Clients liquidity positions
D) client’s debt
Answer: B- its specifies balance sheet
Is a time deposit federally insured?
Yes- time deposit is a CD
During the college years, which of the following techniques is best for families ($180k MAGI) to pay the tuition for 1st yr of college?
A PLUS and a Coverdell ESA-
529, Coverdell cannot cordinate w an earning credit. Pull Grant is need based.
How are QTP and UTMA accounts different?
QTP owner retains the right to determine how and when to use the $/Custodian of UTMA loses control when student reaches majority
QTP owner can change the beneficiary/ Custodian of UTMA cannot
QTP grow tax deferred, distributions tax free if for qualified purchase. UTMA distributions are subject to regular and kiddie tax
Until what age is kiddie tax applicable?
24
Pro Forma statement
Projects the expected result of the next yr or longer
Sandy has her Series 6 - what may she NOT sell?
Mutual Funds trading on major stock exchange.— mutual funds do not trade on stock exchange - close ended I’d, but you need a series 7
Mary Ann is a very conservative inventory. She is concerned about a possible recession due to higher oil prices. Which two industries are typically most effected by recession?
Capital Goods and Consumer Durable Goods
Mary Ann quit her job to go back to college- how long will her COBRA last?
18 months
What do these facts represent?
Beneficiary must be under 18 when contributions are made
Contributions are treated as gifts of present interest from the contributor
Qualified expenses include religious elementary school costs
Permissible investments include stocks and bonds
Coverdell ESA
What type of investments/arrangement may help parents achieve their college savings goals?
Coverdell ESA
UGMA.UTMA
Tax exempt muni bonds
Savings bonds
ABC test for Investment Advisors
Provide advice
In the business of providing such services
Compensation
What are the two proper ways that CFP certification may be used?
CFP (TM)
Certified Financial Planner (TM)
NO periods and NO (R)
