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Ri CFP > General Principles Chapter 5 > Flashcards

General Principles Chapter 5 Flashcards

Financial Institutions

1
Q

Function of Banks

A

perform financial transactions (receive, invest, lend money)

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2
Q

Purpose of Banks

A

financial intermediary

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3
Q

Regulation

A

3 agencies for national banks: comptroller of the currency, FDIC, federal reserve bank, for state banks - state regulation

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4
Q

Savings & Loan Thrifts

A

acquire funds through time deposits, funds used to make mortgage loans

regulated by fdic & fed home bank board

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5
Q

Insurance on Account Levels

A

$250k per depositor per insured bank

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6
Q

Revocable Trust

A

additional $250k per bene named in a revocable trust

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7
Q

Credit Union

A

members with a common affiliation, national credit union share insurance fund regulates, where you can borrow at a reasonable rate

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8
Q

Brokers and Dealers

A

dealer: principal in a securities transaction, buy from sellers/sell to buyers

broker: matches buyers to sellers

most brokerage firms are both

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9
Q

Broker/Dealer Purpose

A

agents in executing orders to buy and sell securities on different exchanges

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10
Q

Broker Dealer Regulations

A

SEC

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11
Q

Insider Trading & Securities Fraud Enforcement 1988

A

no insider trading

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12
Q

Insurance Companies

A

help clients protect assets & income

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13
Q

Insurance Company Regulation

A

state regulation mostly

all three branches of government regulate the industry

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14
Q

Insurance Companies Purpose

A

mechanism for risk sharing and risk transfer

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15
Q

Mutual Fund Companies

A

mutual fund is operated by an investment company - raises $ from shareholders and invests - regulated by SEC

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16
Q

Securities Act of 1933

A

Purchasers of new issues be provided with a prospectus before a transaction

17
Q

Securities Act of 1934

A

regulates the secondary market, also created the SEC

18
Q

Investment Company Act of 1940

A

authorized SEC to regulate UITs and manage investment companies

19
Q

Investment Advisors Act of 1940

A

authorized sec to monitor those who advise pension funds, individuals & institutions. specifies what qualifies as investment advice and who must register with regulators

20
Q

Securities Investors Protection Act of 1970

A

established SIPC to supervise securities firm. protection against failure of brokerage firm, not bad investing.

21
Q

Trust Companies

A

org associated w commercial bank, engages in fiduciary investment and estate planning. administers trust funds and other related services. can be named as an executor or personal rep

Ri CFP (18 decks)

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