Important Things

Question 1

r2 may not be given

Answer 1

but correlation coefficient will be, you just need to square the correlation coefficient

Question 2

Losses are limited

Answer 2

You can only recognize $3000/year in losses. You can net out gains with losses, but only $3000 can recognized when calculating AGI

Question 3

Pay attention to what data for formulas, may not have to do the whole equation

Answer 3

rm = market return
rm-rf = market risk premium
(rm-rf)Beta = stock premium

Question 4

Not included in annual additions

Answer 4

catch ups
and 457 plans

Question 5

Charitable Contributions

Answer 5

Don’t assume FMV is the highest deduction

Question 6

Standard Deduction v. Itemized

Answer 6

Don’t assume itemized deductions, sometimes standard is more.

Question 7

Phaseouts

Answer 7

1. High end of phaseout - MAGI
2. divide that by the spread of the phaseout
3. gives a % of the amount that is deductible

Question 8

P/E Calculation

Answer 8

Market cap/net income
If P/E is falling, should not invest

Question 9

Net Profit calculation

Answer 9

Net income/total sales

Question 10

A Tort

Answer 10

a private or civil wrong or injury, other than a breach of contract, for which the court will provide a remedy in the form of an action for damages

Question 11

Under the common law, liability may be based upon

Answer 11

Breach of contract,
Negligence, or
Fraud.

Question 12

Violations of the Federal False Statements Statute may include

Answer 12

false SEC filings, carry fines and imprisonment of up to five years, or both

Question 13

Financial planners may be subject to___________ by violating the Federal Securities Law, such as the Securities Act of 1933 and the Securities Exchange Act of 1934.

Answer 13

statutory liability

Question 14

Calculate Dividend Growth

Answer 14

PV = first dividend
FV = -last dividend
N = # of years over
I/YR = growth