Part 2: Chapter 5 - The Uniform Prudent Investor Act Flashcards
Under the Uniform Prudent Investor’s Act is diversification generally required?
What’s an investment type that helps achieve this?
Yes
Mutual Funds
Under the Uniform Prudent Investor’s Act, is a trustee required to consider the needs of the trust’s heirs OR beneficiaries?
Beneficiaries
Can a trustee invest in ANY kind of property of type of investment consistent with the trust’s portfolio strategy?
Yes
Under the Uniform Prudent Investor’s Act, is a trustee considered to have custody of client funds?
Why?
Yes
Because they can write and deposit checks into the account.
According to the Uniform Prudent Investor’s Act, a trustee’s investment decisions should be based on what ….?
An overall investment strategy
What is FinCEN’s primary mission?
- Safeguard the financial system
- Prevent money laundering
- Collect financial intelligence
What are the three stages of money laundering?
Placement
Layering
Integration
(PLI)
What triggers a …
- Currency Transaction Report (CTR)?
- Suspicious Activity Report (SAR)?
- $10,000+ CASH in a single day
- $5,000+ in cash or assets AND suspicion of federal criminal activity.
What triggers a Currency Transaction Report (CTR) on an account in a foreign country?
An account value greater than $10,000.
If a firm suspects an SAR, how son must they report?
What are the possible results if they fail to report?
30 days
Termination
Fines
Criminal prosecution
Imprisonment
What defines Retail Correspondence?
What defines Retail Communications?
Who are considered investors?
25 or LESS investors within 30-days.
25 or MORE investors within 30-days.
Existing and prospective customers.
A Mutual Fund is a type of _____________ company.
Investment
What are TJHREE ways customers are charged fees with a Mutual Fund?
Sales Load
No Load
12b-1
What type of expense ratio does a No-Load Mutual typically have?
50 basis points = .005 = .5%
Can a Load or No-Load Mutual Fund charge a 12b-a fee?
No-Load
What’s the difference between Cash and Margin accounts with respect to purchasing securities?
Cash - pay upfront
Margin - pay 50% upfront
What is a 12b-1 fee?
How often is it charged?
From what is it charged against?
Fee for marketing and distribution.
Annually
The Funds assets.
What does a Call option give the …
- Buyer
- Seller
The RIGHT to BUY 100 shares at set price for a period of time.
The OBLIGATION to SELL 100 shares at a set price.
What does an ESG Fund invest in?
Stupid Environmental, Social and Governance initiatives.
What does a Put option give the …
- Buyer
- Seller
The RIGHT to SELL 100 shares at set price for a period of time.
The OBLIGATION to BUY 100 shares at a set price.
Under the NASAA, how must financial professionals’ mange the following with respect to vulnerable adults:
- Mandatory reporting
- Notifications to Third Parties
- Delayed Disbursements
Mandatory reporting: must PRONPTLY report
Notifications to Third Parties: only if previously authorized by the customer
Delayed Disbursements: can delay up to 15 business days if they reasonably suspect it’d result in exploitation.
What is a FinFluencer?
A person online posing as a financial profession in order to persuade the financial decisions of others.
What’s a common red flag of fraudulent financial schemes?
The promise of high returns with no risk.
