Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

CFP Final > CFP Final > Flashcards

CFP Final Flashcards

1
Q

Fee Only Advisor:

A

May NOT receive sales related comp

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Borrowing money as a CFP

A

Permitted from a family member or client that regularly engages in the business of lending

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Fee-Based:

A

Planner or firm are compensated through BOTH commission and fees

Sales Comp:
Commission, 12 b-1, Bid/Ask spread, TRX fees, Revenue sharing, solicitor fees.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Who is tasked with disciplinary actions?

A

DEC - Max sentence 5 years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

The Fitness Standards provides the standards against which CFP Board will evaluate the

A

ethical fitness of a candidate for CFP® certification

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

PITI

A

Principal, Interest, Taxes (property), and Insurance (homeowners)

28% of GROSS INCOME (not net)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Debt does not include:

A

Taxes or insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

IF NPV is Positive =

If NPV is Negative =

A

Positive = IRR > RRR

Negative = IRR < RRR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What agencies monitor banks:

A

FDIC
Fed Reserve
Comptroller of currency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Insurance industry three branches of gov’t:

A

Legislative passes laws
Courts interprets laws
Executive branch enforces the laws

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who regulates brokerage companies?

A

Both the SEC and FINRA are involved in regulating brokerage companies, but FINRA is the organization specifically tasked with the direct regulation and oversight of brokerage firms on a day-to-day basis. The SEC regulates THROUGH FINRA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

American Opportunity Credit (AOC):

A

$2,000 + 25% of expense up to $2,500

Only first 4 years of college

MAGI phase outs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Lifetime Learning Credit:

A

$2,000 max (20% first $10k)

Under grad, grad, continuing ed

MAGI phase outs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Coverdell Withdrawal:

A

College, must be used by 30

Max contribution in total of $2,000

MAGI phase out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

529 and Coverdell accounts are considered:

A

Treated as parents assets for financial aid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

For a business to qualify for COBRA:

A

Must have 20 employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Compensatory vs Punitive:

A

Compensatory tax free
Punitive is taxable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does the federal reserve influence?

A

Monetary Policy

  1. Reserve Requirements
  2. Discount Rate (Fed reserve charges banks to borrow)
  3. Open Market Operations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Leading Indicators:

A

Initial claims for unemployment Insurance
New manufacturing orders
New private housing
Stock prices
Index of consumer expectations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Coincidental Indicator:

A

Industrial Production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What leads CPI or PPI?

A

PPI leads CPI

As producer costs rise, tend to pass to the consumer (CPI)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is the slowing down of prices called?

A

Disinflation

(Deflation is the decline in the price)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

FHA:

A

Federal Housing Admin

Gov’t guaranteed loans.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Definition Investment Advisor:

A

All three “ABC”

Advice, Business, Compensation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
FINRA Registration:
1. Associate with broker dealer 2. Register with FINRA through a B/D on form U4 3. Pass exams 4. Central Registration Depositary (CRD)
26
Perils (Basic):
WHARVES / FLT Wind / Aircraft / Riot / Vandalism / Vehicles / Explosion / Smoke / Fire / Lightning / Theft
27
Perils (Broad):
WHARVES / FLT + RAFF RAFF Rupture in system / Artificial Electricity Generated / Falling objects / Freezing
28
Homeowner Exclusions:
OPEN WIF Ordinance / Power Failure / Earthquake / Nuclear / War / Intentional loss / Flood
29
Coinsurance required for residential and commercial buildings:
80% and 90%
30
Replacement cost vs ACV:
When items replaced on a replacement cost - no deduction for depreciation Under ACV, losses are replacement cost - depreciation
31
Disability Insurance Premiums paid by: EE Contract owned by: EE
Benefits Tax free Not deductible for premiums
32
Disability Insurance Bonus arrangement Section 162 Premiums paid by: ER Contract owned by: EE
- Benefits : Tax free (premium included on W2) - Deductible by ER as a bonus
33
Disability Insurance Paid by ER under salary continuation (Group Plan) Premiums paid by: ER Contract owned by: EE
- Benefits are taxable - Deductible by ER
34
Disability Insurance Paid by partnership or S Corp Premiums paid by: Partnership/S Corp Contract owned by: Partnership/S Corp
- Benefits are tax free - Deductible by Partnership/S Corp
35
Skilled nursing Medicare coverage:
- First 20 days paid in full by Medicare - 21 - 100 co pay ($204 per day) - >100 days insured pays in full Skilled nursing means condition SHOULD get better - no Alzheimer's
36
5th Dividend option:
Purchasing 1 year term with dividends
37
Nonforfeiture Options for insurance:
- Cash out (6 month delay can be imposed****) - Reduced paid up - Paid up term
38
Life Insurance Dividend options:
- Cash - Reduced premium due - Accumulate with interest - Paid up additions - One-year term (the divided)
39
Split Dollar Plans:
Endorsement method or Collateral assignment method
40
Collateral Assignment Method:
EE is the owner Death of EE ER gets premiums back EE gets CV or beni gets DB
41
Endorsement method:
ER owns the policy and retains CV and EE beni gets the balance of DB
42
BOE
Business overhead expense When business owner is disabled actual expenses are paid (not salary)
43
BOE for sole propritors:
Premiums paid on BOE during disability ARE DEDUCTIBLE and proceeds are TAXABLEBOE for
44
BOE for Corporations:
Premiums are not deductible, but benefits are tax free
45
Joint life vs joint life and survivor annuity:
Joint and survivor continues Joint life ceases on death of first annuitant
46
When purchasing a split dollar policy, endorsement method:
You pay the higher of the CV or premiums paid
47
Must register with state vs SEC:
Must register with state, Advisers managing between $100 million and $110 million in AUM have the option to register with the SEC or the state but must register with the SEC once they exceed $110 million in AUM.
48
OID Bonds interest income:
Pay no interest until maturity. However, each year a portion of taxable interest income is included - no interest income but must report taxable - phantom income
49
Tbill / Notes / Bonds maturities:
Bills: 3, 6, and 12 Notes: 1-10 years Bonds: 10-30 years
50
STRIPS discount is treated:
Taxable income earned annually
51
TIPS:
Taxed annually on interest plus appreciation of face value
52
EE Bond and I Bonds taxation:
Interest earned is not subject to fed taxation until redeemed, Could instead have interest taxed each year
53
Indenture:
Formal agreement, deed of tryst between bond issuer and the trustee: - Form of bond - amount of issue - property pledged - Protective covenant - Working capital/CR - Redemption rights
54
NOI Calc:
Gross Rental Receipts + Non rental income -------------------------------- = Potential Gross Income (PGI) - Vacancy/collection losses = Effective Gross income - OE -------------------------------------- = NOI
55
Intrinsic Value:
IV = NOI / Cap Rate
56
If correlation is +1:
the weighted avg risk is the MAX
57
To avoid penalties when estimating tax:
1. 90% of current years tax liability 2. 100% of prior years liability 3. 110% of last years liability if GI is >$150k
58
Failure to file income tax return:
5% of taxes due each month up to 25%
59
Failure to pay taxes:
.5% per month up to 25%
60
Fraud when doing taxes:
75% of under paid amount
61
Negligence when doing taxes:
20% under payment amount
62
Frivolous return:
$5,000 - omitting info needed to determine tax liability
63
MACRS Property Classes:
- 5 Year (1245) "CAT" - Computers, Autos, trucks - 7 Year (1245): Office furniture - 27.5 Year (1250): Residential Rental Property - 39 Year (1250): nonresidential real property

CFP Final (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions