Chapter #1 Flashcards
What term describes the range of possible future outcomes on the price of a security?
Risk
Net Worth Calculation
Assets - Liabilities
Know your Customer: Financial Goals & Objectives
- Customer has a particular target like when they would like to retire
- the customers goals will depends on their ability to save money and tolerate investment risk
- Goal is usually linked to age and stage in life
Know Your Customer: Financial Curcumstance
Determine amount that can be committed to investments and level of risk they can handle
- Can improve circumstance by diversifying investment and stability of employment with savings habits
Know Your Customer: Personal Cicumstance
- Stage of life
- Saving for investment habits determine how much funds are available
Know Your Customer: Investment Knowledge
More experienced investors tend to understand investment risk and how much risk they can tolerate
- Less knowledge = low risk investment
- More knowledge = high risk investment
Know Your Customer: Ability to Tolerate Risk
Risk = tolerance of rapid change of possible outcomes vs. The price of security
Types of Responsibilities: Legal Responsibility
You must ensure that the investment is suitable for your customer. Fits customer’s investment needs and objectives, personal and financial circumstances, investment knowledge, risk profile and investment time horizon
Types of Responsibilities: Ethical
You must place your client’s needs before your own needs or those of your dealer
Types of Responsibilities: Professional
You must provide the best client service possible
Meet all responsibilities of know your client, know your products, and know that you have the obligation to refuse to sell an unsuitable product to the client
Which organization regulates mutual and investment funds?
Securities commissions
