WAB General Principles Flashcards
Net worth is _______ by purchasing an asset with a partial loan
Unchanged/unaffected
Coverdell ESA Accounts
- been is under 18 during contributions
- can invest in stocks/bonds
- contributions are treated as a gift
- qualified expenses include religious elementary
If a client takes a reverse mortgage and passes away, then
- the heirs can sell the house & use proceeds to pay it off
OR - the heirs can refinance to pay off the mortgage balance
Auto sales lead the business cycle into
Expansion
Negligence is an…
Unintentional tort
Emergency Fund calcs include
Fixed and variable expenses but NOT taxes
UTMAs are considered ____ assets for financial aid
529s are considered _____assets for financial aid
1) student
2) parent
Treasuries are ______ by the US govt
GUARANTEED NOT INSURED
Brokered CDs carry ______ while regular CDs do not
Interest rate risk
Securities in a brokerage account are __________ by SIPC
“LIKELY insured”
SEC regulates brokerage companies through ______
FINRA
Best transfer arrangements for unmarried partners are
Revocable trusts and TIC (not a will)
If a money winner chooses the annuity option to payout over 10 years
- payouts are taxed as received
- must opt in during 60day window
Compensatory damages and structured settlements are______ but punitive damages are________
1) tax free
2) taxable
Are capital goods and consumer durable goods affected by a recession?
YES
When a client wants to live SOLELY off of return (not principal)…..
1) Divide the amount needed by the rate of return adjusted for inflation
2) add one year amount
You must notify the CFP board of a reportable matter within
30 days
CFP Suspensions are_________
Automatically published
CFP Revocation is
Permanent
Who controls monetary policy
FOMC
Who sets the prime rate
BANKS not the fed
CH. 11
CH. 13
CH. 7
7 - discharges debt/federal exemption
13 - reorganization/debt reduced and paid over 5 yrs
11 - no regular source of income/partial or complete discharge of debt
Agents are loyal to the
Company
Brokers are loyal to the
Client
Federal Housing Administration (FHA)
Govt guarantees mortgages through FHA insurance for low to middle income individuals
(Mortgage max between $270k-730k)
What are the forms of discipline for the CFP Board to administer?
- private censure
- suspension
- revocation
- public letter of admonition
(NOT private letter of admonition)
Can you pay down a mortgage to reduce PITI
No PITI remains constant but the loan will be paid off quicker
