GP Flashcards
Leading Economic Indicators
- Initial claims for unemployment insurance
- New manufacturing orders
- New private housing units
- Stock prices, 500 common stocks
- Index of consumer expectations
Money supply
Interest rate spread
Avg weekly hours for production workers in manufacturing
Coincident Indicators
- Industrial production
Lagging Indicators/Confirming Indicators
- Avg duration of unemployment
- Avg prime rate charged by banks
- Commercial and Industrial loans outstanding
Gross Domestic Product GDP
- US economy’s total production of goods and services.
- Measures the dollar value of all final goods and services NEWLY produced within the country’s boundaries.
- GDP counts economic activity without regard to yearly price fluctuations (inflation)
Consumer Price Index CPI
“Market basket” of selected good and services in various cities across the country
CPI has 8 major categories
- Food & Beverages
- Apparel
- Education & Communication
- Housing
- Transportation
- Other goods & services
- Recreation
- Medical care
Producer Price Index
- Index of the price of various items such as farm products and industrial commodities.
- Does not include the value of services as does the CPI.
- Leading indicator of inflation trends is PPI
Inflation
Too much money chases too few goods
Deflation
The decline in the price of goods and services
Stagflation
The combination of slow economic growth and high unemployment with rising prices
Monetary policy
Action taken by the Federal Reserve to influence the growth of the money supply
Fed Action
- Reserve requirements
- Discount Rate
- Open market operations
- Margin rates
Mortgage Calculations for full life of loan
How much interest was paid during the life of an $80.000 loan at 9.75% interest and a 30-yr term?
Step 1:Solve for payment
12#End
PV: -80,000
N:30
I:9.75
Pymt=$687.32
**Step 2: payment x # of payments **
687.32 x 12x 30=247,435.2
Step3: subtract loan amount to find total interest paid
247,435.2- 80,000 (loan)
Definition of an Investment Advisor
- A person who provides ADVICE
- A person who is in the BUSINESS
- A person who provides services for COMPENSATION
ALL 3 MUST APPLY
Exceptions to filing as an Investment Advisor
BLEAT
* Bank
* Lawyer
* Engineer
* Accountant
* Teacher
All of these who’s advisory services is solely incidental to the practice of their profession