General Principles and Conduct Flashcards
Real GDP Excludes:
1)
2)
3)
4)
5)
1) imports
2) inflation
3) transactions where money changes hands, but no new goods or services are produced
4) income of U.S. citizens working abroad
5) profits earned by U.S. companies in foreign countries
Real GDP Includes:
1)
2)
3)
1) market value of all final goods and services produced within an economy
2) income of foreigners working in the U.S.
3) profits that foreign companies earn in the U.S.
When investors consider the past, they will tend to suffer from:
1)
2)
3)
1) house-money effect (take more risk)
2) snakebite effect (take less risk)
3) break-evenitis (take more risk)
The percentage of deposits that must be held on reserve
reserve requirement
The rate at which member banks borrow from the government
discount rate
What are the Fed’s 3 primary tools?
1) discount rate
2) reserve requirement
3) open market activities
Who controls Fiscal Policy?
Congress
Who controls Monetary Policy?
The Fed
When a good’s quantity demanded responds little to price changes
inelastic
When a good’s quantity demanded responds greatly to price changes
elastic
What is the GDP formula?
C + I + G + (X-M)
C = consumer spending
I = investment made by industry
G = government spending
X = exports
M = imports
The market value of goods and services produced by labor and property in the U.S.
GDP
A recession is defined as:
2 consecutive quarters of negative (year-over-year) GDP growth
Contraction in the business cycle is characterized by:
decreasing GDP and increasing unemployment rate
Expansion in the business cycle is characterized by:
increasing GDP and decreasing unemployment rate
A written reproach of the respondent’s behavior published in a press release
public letter of admonition
Prohibition of using CFP marks, stating or suggesting they are a CFP for a minimum of 90 days and a maximum of 5 years
suspension
The termination of a respondent’s right to use the CFP marks. A permanent bar from using or obtaining CFP certification
revocation
An unpublished written reproach mailed by the DEC to a censured respondent
private censure
An appeal to the Board of Directors’ Appeals Committee must be filed within how many days of issuance of DEC final order?
30
Hearing documents, written statements, and stipulations are due within how many days after delivery of a written complaint?
45
Consists of at least 3 people, most of whom must be a CFP professional, and the Chair must be a DEC member
hearing panel
Has the authority to issue a final order that finds facts, determines whether a violation has occurred, and, where appropriate, imposes discipline in the form of a sanction
Disciplinary and Ethics Committee (DEC)
What are the 3 levels of Fiduciary Duty?
1) duty of care
2) duty of loyalty
3) duty to follow client instructions
Written notice must be delivered to the CFP board how many days after adverse conduct?
30 calendar days
What is the “signal” to Fiduciary Duty?
financial advice
How many days must a CFP disclose material changes (such as fees) to a client?
90
What are the 3 ladders under the Duty of Loyalty?
1) above my own interests
2) above my firm’s interests
3) avoid material conflicts of interest
The witness list is due within how many days after receiving a complaint?
30
Has the authority to investigate and file a complaint against a respondent for alleged violations
CFP Board Counsel
The rate at which banks borrow from each other
fed funds rate
The rate at which banks lend to their customers
prime rate
What is the ideal GDP %?
3-3.5%
What is the ideal unemployment rate?
4%
What is the target inflation rate?
2-2.5%
This theory happens when people suffer more greatly from losses than they benefit from gains
prospect theory
What effect lends to people seeking pride and avoiding regret?
disposition effect
