Fundamentals Flashcards
(104 cards)
1
Q
Responsibility is on which party in the third step of the financial planning process?
A
Planner only.
Tip: while you need to understand the order of the planning process, you should also understand which steps involve only the planner and which are inherently collaborative.
2
Q
What are the leading economic indicators?
A
- *Mon**ey supply
- *Equ**ity prices
- *Ne**w manufacturing orders
- *Unempl**oyment data
- *Hous**ing starts
- *Yie**ld curve
A good way to remember a bulk of these indicators is by remembering MENU (money supply, equity prices, new manufacturing data, and unemployment).
3
Q
What are three purposes of an IPS (investment policy statement)?
A
- *Establ**ished client objectives
- *Establ**ishes the limitations of the portfolio manager
- *Us**ed to measure performance
4
Q
What is not included in an investment policy statement?
A
Does not include investment selection.
5
Q
What life event would require a client to contact their CFP® professional?
A
When there is a change in marital status.
Tip: while there are a number of reasons a client would contact their CFP® professional, a change in martial status bleeds into a variety of other important areas of a client’s financial life (tax, estate, etc.).
6
Q
What is another term for the ADV Part III?
A
Form CRS (Client Relationship Summary).
This document should be in “plain English.”
7
Q
What is an exemption to the 1940 Act?
A
Advisors that only have insurance companies as clients.
Do not confuse this with exceptions to the 1940 act.
8
Q
Who is responsible for monetary policy?
A
The Federal Reserve (The Fed).
Do not confuse this with fiscal policy that deals with taxation and government spending.
9
Q
Associate the term “financial risk” with ________ & ________.
A
Debt & leverage.
10
Q
What part of the ADV must be in narrative form?
A
ADV Part II.
This is not the same as ADV Part III, known as Form CRS (Client Relationship Summary).
11
Q
When the Federal Reserve BUYS securities on the open market, does this increase or decrease the money supply?
A
Increase.
12
Q
When calculating a client’s total debt ratio, what should you be careful not to include?
A
Auto insurance.
You may be tempted to include insurance payments in a debt ratio because of how the question is posed during the exam. Remember to only include recurring debt obligations.
13
Q
What does section 206 of the 1940 Act deal with?
A
Fraud or deceit.
14
Q
When calculating an individuals saving ratio, what should you always remember to include?
A
The employer portion of a contribution to a retirement plan.
15
Q
More than any de minimis benefit on a sale of an asset would be considered to be ________?
A
Sales related compensation.
16
Q
When should a CFP® professional disclose the use of third parties, as well as areas of expertise?
A
Prior to entering a planning engagement.
17
Q
Taxes are _______ on a cash flow statement?
A
An expense.
18
Q
When the Federal Reserve SELLS securities on the open market, does this increase or decrease the money supply?
A
Decrease.
19
Q
What are three items that need to be in writing in a financial planning engagement?
A
- *Priv**acy policy
- *Compen**sation disclosures
- *Ter**ms of engagement
Remember: conflicts of interest can be delivered orally.
20
Q
Which year should you associate Reg D?
A
1933.
The Securities Act of 1933 relates to Regulation D.
21
Q
In which step of the PracticeStandards does the establishment of services arise?
A
Step III, analyzing the client’s course of action and potential alternative course(s) of action.
22
Q
If a client wants the ability to fully control the assets in an account for higher education, what may be a good recommendation?
A
Coverdell Account.
While an Education Savings Account (529) may seem like a good choice, remember that the investment options and strategies may sometimes be limited in these accounts.
23
Q
How long does a CFP® professional have to report a professional license suspension?
A
30 days.
24
Q
Would you find the rules against borrowing money from clients in the Code of Ethics or the Standards of Conduct?
A
Standards of Conduct.
Found under Duties Owed to Clients, a CFP® professional should not lend money to, or borrow money from a client UNLESS that client is a member of the CFP® professional’s family OR the lender is in the business of lending money.
25
**I**f **a** **go**od **i**s **consi**dered **t**o **ha**ve **pri**ce **inelast**icity, **wh**at **wou**ld **hap**pen **i**f **pri**ces **ris**e?
**Reve**nue **wou**ld **al**so **ris**e.
**Wh**en **goo**ds **ar**e **consi**dered **t**o **b**e **inela**stic, **pri**ce **do**es **no**t **resp**ond **t**o **chan**ges **i**n **dema**nd. **Thi**nk **abo**ut **ever**yday **essen**tials **a**s **a**n **exam**ple: **medic**ine, **utili**ties, **gasol**ine. **Peo**ple **wi**ll **purc**hase **the**se **goo**ds **regar**dless **o**f **pri**ce.
26
**Wh**at **sho**uld **b**e **a** **to**p **prio**rity **aft**er **a** **jo**b **los**s?
**Fi**le **fo**r **unemplo**yment.
27
**Wh**at **i**s **th**e **long**est **a** **CF**P® **profes**sional **ca**n **ha**ve **the**ir **mar**ks **suspe**nded?
**5** **yea**rs. **Th**e **shor**test **per**iod **i**s **9**0 **day**s.
28
**Wh**en **mu**st **confl**icts **o**f **inte**rest **b**e **discl**osed **b**y **a** **CF**P® **profess**ional?
**Bef**ore **provi**ding **serv**ices & as **mate**rial **confl**icts **ari**se.
29
**Whi**ch **ac**t **cov**ers **th**e **regist**ration **o**f **inves**tment **advis**ors?
**Th**e **Inves**tment **Advi**sers **Ac**t **o**f **194**0.
30
**Wh**at **sho**uld **b**e **discl**osed **t**o **a** **finan**cial **plan**ning **cli**ent **a**t **th**e **fir**st **meet**ing?
**Th**e **CF**P® **profess**ional’s **ar**ea **o**f **exper**tise.
31
**Wh**at **wou**ld **a**n **ADV**-W **b**e **us**ed **fo**r?
**A**n **ADV**-W **i**s **a** **not**ice **o**f **withd**rawal **fr**om **regist**ration **a**s **a**n **inves**tment **advi**sor.
32
**Mate**rial **chan**ges **mu**st **b**e **repo**rted **t**o **th**e **CF**P® Board **wit**hin **ho**w **ma**ny **day**s?
**3**0 **day**s.
**Don**’t **mi**x **th**is **u**p **wi**th **th**e **num**ber **o**f **da**ys **t**o **not**ify **clie**nts **o**f **mate**rial **chan**ges **(9**0 **day**s).
33
**Wh**at **i**s **on**e **thi**ng **t**o **ke**ep **i**n **mi**nd **wh**en **work**ing **wi**th **a** **cli**ent **wh**o **ha**s **a** **chi**ld **wi**th **spec**ial **nee**ds?
**Ens**ure **th**at **an**y **recommen**dation(s) **wou**ld **no**t **inter**fere **wi**th **th**e **chil**d’s **abil**ity **t**o **rece**ive **gover**nment **assist**ance.
34
**Wh**at **do**es **a** **qui**ck **rat**io **meas**ure?
**Liqui**dity.
35
**D**o **lot**to **winn**ings **incr**ease **wi**th **infla**tion?
**No**.
**Th**is **i**s **help**ful **t**o **kn**ow **i**n **th**e **eve**nt **th**e **ex**am **as**ks **yo**u **t**o **calcu**late **th**e **pres**ent **val**ue **o**f **a**n **annu**ity **ste**am **rela**ted **lot**to **winni**ngs. **Th**ey **ma**y **ev**en **prov**ide **yo**u **wi**th **th**e **ann**ual **infla**tion **ra**te **a**s **a** **detra**ctor.
36
**Cons**umer **de**bt **sho**uld **no**t **exc**eed **\_\_\_\_\_**\_\_\_?
**20**% **o**f **NE**T **inco**me.
**O**f **al**l **th**e **rat**ios **(hou**sing **an**d **hous**ing **pl**us **recur**ring **deb**t), **th**is **i**s **th**e **on**ly **on**e **th**at **us**es **NE**T **inco**me.
37
**Ho**w **mu**ch **ti**me **i**s **a** **CF**P® **giv**en **t**o **prov**ide **evid**ence **th**at **th**ey **ha**ve **stop**ped **usi**ng **th**e **CF**P® **mar**ks **(d**ue **t**o **a** **discip**linary **issu**e).
**4**5 **day**s.
38
**I**f **a** **ques**tion **i**s **ask**ing **abo**ut **cons**umer **deb**t, **wh**at **sho**uld **yo**u **calcu**late?
**Cre**dit **ca**rd **deb**t.
39
**Ho**w **lo**ng **bef**ore **PL**US **loa**ns **ne**ed **t**o **b**e **repa**id?
**1**0 **yea**rs.
40
**I**s **compen**sation **addre**ssed **i**n **th**e **Co**de **o**f **Eth**ics **o**r **i**n **th**e **Stand**ards **o**f **Cond**uct?
**Stand**ards **o**f **Cond**uct.
41
**Wh**at **ca**n **b**e **prov**ided **t**o **a** **cli**ent **i**n **ord**er **t**o **sati**sfy **th**e **broc**hure **rul**e?
**AD**V **Pa**rt II**.**
42
**UT**MA **an**d **UG**MA **custo**dial **acco**unts **ar**e **consi**dered **t**o **b**e **ass**ets **o**f **th**e **pare**nts **o**r **chi**ld?
**Ass**ets **o**f **th**e **chi**ld.
**Impor**tant **t**o **kn**ow **wh**en **determ**ining **th**e **Expe**cted **Fam**ily **Contri**bution **fo**r **educat**ional **assist**ance.
**52**9 **an**d **C****over**dell**acco**unts**ar**e**consi**dered**t**o**b**e**ass**ets**o**f**th**e**pare**nt.
43
**Wh**at **i**s **th**e **adjus**tment **proc**ess **i**n **a** **compet**itive **mark**et?
**A** **mo**ve **tow**ard **equili**brium.
44
**I**f **a**n **exis**ting **engag**ement **wi**th **a** **cli**ent **lea**ds **t**o **th**e **ne**ed **fo**r **a** **dee**per **engage**ment, **ho**w **sho**uld **a** **CF**P® **profes**sional **proc**eed?
# **Def**ine **a** **ne**w **sco**pe **o**f **engage**ment.
45
**Empl**oyer **educat**ional **assis**tance **prog**rams **ca**n **he**lp **off**set **th**e **co**st **o**f **undergr**aduate **o**r **grad**uate **progr**ams?
**Bot**h.
46
**Stud**ent **loa**ns **g**o **in**to **defa**ult **aft**er **\_\_\_\_**\_\_\_\_ **day**s?
**27**0 **day**s.
47
**Ho**w **lo**ng **do**es **a**n **indiv**idual **ne**ed **t**o **wa**it **betw**een **Chap**ter **7** **bankrup**tcies?
**6** **yea**rs.
48
**Wh**o **establ**ishes **th**e **pri**me **rat**e?
**Comme**rcial **ban**ks.
**Don**’t **conf**use **th**is **wi**th **th**e **Disc**ount **Ra**te **th**at **i**s **se**t **b**y **th**e **Fede**ral **Rese**rve. **Th**e **Pri**me **Ra**te **i**s **th**e **ra**te **comme**rcial **ban**ks **cha**nge **the**ir **mo**st **credit**worthy **custo**mers.
49
**Pe**ll **Gra**nts **ar**e **no**t **avail**able **t**o **\_\_\_\_\_**\_\_\_?
**Grad**uate **stude**nts.
**Neit**her **ar**e **Fede**ral **Supple**mental **Educat**ional **Opport**unity **Gra**nts **(FSE**OG).
50
**Open**ing **a**n **acco**unt **com**es **bef**ore **o**r **aft**er **provi**ding **prod**uct **disclo**sures?
**Aft**er **provi**ding **prod**uct **disclo**sures.
51
**Wha**t’s **anot**her **te**rm **fo**r **th**e **Cons**umer **Cre**dit **Prote**ction **Ac**t?
**Th**e **Fa**ir **Cre**dit **Repor**ting **Ac**t.
52
**Ar**e **contrib**utions **t**o **a** **Cover**dell **Acco**unt **ta**x **deduct**ible?
**No**.
**Howe**ver, **th**e **acco**unt **gro**ws **ta**x **fr**ee **an**d **quali**fied **distrib**utions **ar**e **al**so **ta**x **exem**pt.
53
**Par**ent **PL**US **loa**ns **ar**e **no**t **avail**able **fo**r **wh**at **lev**el **o**f **educa**tion?
**Grad**uate **sch**ool **progr**ams.
54
**I**s **secu**rity **pri**ce **manipu**lation **cove**red **i**n **th**e **Th**e **Secur**ities **Ac**t **o**f **19**33 **o**r **th**e **Secur**ities **Exch**ange **Ac**t **o**f **193**4.
**Th**e **Secur**ities **Exch**ange **Ac**t **o**f **193**4.
**A** **go**od **wa**y **t**o **reme**mber **th**is **i**s **t**o **reme**mber **th**at **th**e **Secur**ities **Exch**ange **Ac**t **o**f **19**34 **dea**ls **wi**th **exis**ting **securi**ties, **rat**her **th**an **ne**w **secur**ities **cove**red **i**n **th**e **Secur**ities **Ac**t **o**f **193**3.
55
**Wh**en **wou**ld **on**e **bankr**uptcy **b**e **consi**dered **unacce**ptable **behav**ior?
**Wh**en **accomp**anied **wi**th **oth**er **unacce**ptable **behav**ior.
56
**Wh**en **i**s **a** **cli**ent **fir**st **enga**ged **wi**th **a** **CF**P® **profess**ional?
**Wh**en **th**e **cli**ent **rel**ies **o**n **th**e **plan**ners **advi**ce.
57
**Wh**at **ty**pe **o**f **ass**ets **wou**ld **no**t **b**e **incl**uded **i**n **th**e **calcul**ation **o**f **th**e **Expe**cted **Fam**ily **Contri**bution **(FAF**SA).
* *Li**fe **insur**ance **poli**cies.
* *Prim**ary **resid**ence.
* *Retir**ement **acco**unts.
58
**Wh**en **mu**st **fun**ds **fr**om **a** **Cover**dell **acco**unt **b**e **use**d?
By **th**e **ti**me **a** **stud**ent **i**s **ag**e **3**0.
59
**52**9s **ar**e **consi**dered **t**o **b**e **ass**ets **o**f **th**e **\_\_\_\_\_**\_\_\_?
**Pare**nt.
60
**I**f **a** **hig**her **dem**and **i**n **prod**uct **A**, **lea**ds **t**o **a** **hig**her **dem**and **i**n **prod**uct **B**, **ho**w **wou**ld **yo**u **def**ine **th**e **relati**onship **betw**een **the**se **produ**cts?
**Complem**entary **produ**cts.
61
**Wh**at **i**s **a** **non-du**rable **goo**d?
**Prod**ucts **th**at **ar**e **cons**umed **shor**tly **aft**er **purch**ase.
**Thi**nk **foo**d, **bever**ages, **cloth**ing, **et**c.
62
**Subsi**dized **Staf**ford **Loa**ns **ar**e **no**t **avail**able **fo**r **\_\_\_\_\_**\_\_\_?
**Grad**uate **stude**nts.
**Howe**ver, **unsubs**idized **Staf**ford **Loa**ns **ca**n **b**e **util**ized **b**y **grad**uate **stude**nts.
63
**Wh**at **ar**e **3** **typ**es **o**f **de**bt **th**at **ar**e **no**t **disch**arged **i**n **chap**ter **7** **bankru**ptcy?
* *Ba**ck **tax**es **(**3 **yea**rs).
* *Stud**ent **lo**an **de**bt.
* *Alimony**/child **supp**ort.
64
**Ho**w **mu**ch **o**f **th**e **Amer**ican **Opport**unity **Ta**x **Cre**dit **i**s **avail**able **fo**r **Grad**uate **Stude**nts?
**$0**.
**Howe**ver, **th**e **Life**time **Lear**ning **Cre**dit **i**s **avail**able **fo**r **grad**uate **stude**nts.
65
**I**f **a** **CF**P® **profes**sional **susp**ects **ille**gal **acti**vity **wit**hin **the**ir **fir**m, **whe**re **sho**uld **th**ey **rep**ort **behav**ior?
**T**o **the**ir **superv**isor.
**Care**ful, **the**re **ma**y **b**e **a** **num**ber **o**f **choi**ces **o**n **th**e **ex**am **th**at **app**ear **corr**ect **a**t **fir**st **glan**ce: **Th**e **CF**P® **Boa**rd, **FIN**RA, **Th**e **SE**C, **loc**al **author**ities, etc.
66
**Wh**at **ar**e **3** **cau**ses **fo**r **cha**nge **i**n **dema**nd?
* *Cha**nge **i**n **cons**umer **tast**es, **tren**ds, **&** **prod**uct **season**ality.
* *Cons**umer **inc**ome.
* *Cha**nge **i**n **pri**ce **o**f **subst**itute **prod**ucts.
67
**Wh**at **ar**e **thr**ee **characte**ristics **o**f **a**n **RI**A?
* *Th**ey **ar**e **i**n **th**e **busi**ness **o**f **provi**ding **finan**cial **adv**ice.
* *Th**ey **actu**ally **prov**ide **finan**cial **adv**ice.
* *Th**ey **ar**e **compen**sated **fo**r **th**e **adv**ice **prov**ided.
68
**Work**er’s **Compen**sation **i**s **consi**dered **t**o **b**e **\_\_\_\_\_**\_\_\_?
**Insur**ance.
**I**t **i**s **no**t **t**o **b**e **incl**uded **i**n **gro**ss **inco**me. **Don**’t **conf**use **th**is **wi**th **unempl**oyment **whi**ch **i**s **a** **replac**ement **o**f **earni**ngs, **th**us **incl**uded **i**n **gro**ss **inco**me.
69
**Wh**at **i**s **a** **dura**ble **goo**d?
**Goo**ds **th**at **d**o **no**t **ne**ed **t**o **b**e **purch**ased **oft**en.
**Thi**nk **applia**nces, **furni**ture, **machi**nery, **et**c. **Dura**ble **goo**ds **ar**e **mo**re **impa**cted **b**y **unfavo**rable **econ**omic **condi**tions, **su**ch **a**s **reces**sion.
70
**Wh**o **regul**ates **Fo**rm **AD**V?
**Th**e **SE**C **(Secur**ities **an**d **Exch**ange **Commis**sion).
71
**Wh**at **i**s **anot**her **te**rm **fo**r **Fo**rm **CR**S?
**AD**V **Pa**rt III.
72
**Wh**en **compl**eting **th**e **Fr**ee **Applic**ation **fo**r **Fede**ral **Stud**ent **Ai**d, **whi**ch **par**ent **i**s **lis**ted **a**s **a** **prim**ary **caret**aker **wh**en **th**e **pare**nts **ar**e **divor**ced?
**I**t **depe**nds **o**n **whe**re **th**e **chi**ld **resi**des.
73
**Intra**state **exemp**tions **pert**ain **t**o **clie**nts **th**at **res**ide **\_\_\_\_\_**\_\_\_?
In **th**e **sa**me **sta**te **a**s **th**e **advi**sor.
74
**Ho**w **ma**ny **hou**rs **o**f **conti**nuing **educa**tion **mu**st **a** **CF**P® **comp**lete **eve**ry **2** **yea**rs?
**CF**P® **profess**ionals **mu**st **comp**lete **3**0 **hou**rs **o**f **conti**nuing **educa**tion **eve**ry **tw**o **yea**rs.
**O**f **th**e **3**0 **hou**rs, **2** **hou**rs **mu**st **incl**ude **eth**ics **CE**.
75
**Wh**at **ar**e **tw**o **are**as **th**at **ar**e **mo**st **impa**cted **b**y **reces**sion?
**Cons**umer **dura**ble **goo**ds **(e**x. **applia**nces).
**Capi**tal **goo**ds **(e**x. **busi**ness **machi**nery).
76
**D**o **mate**rial **confl**icts **o**f **inte**rest **ne**ed **t**o **b**e **i**n **writ**ing?
**No**.
**Howe**ver, **th**ey **CA**N **b**e **i**n **writ**ing.
77
**Wh**at **mu**st **b**e **i**n **writ**ing **wh**en **provi**ding **finan**cial **adv**ice **a**s **we**ll **a**s **wh**en **provi**ding **finan**cial **plann**ing?
**Th**e **priv**acy **poli**cy.
78
**I**f **a** **cli**ent **beli**eves **th**at **th**ey **ar**e **i**n **a** **finan**cial **plan**ning **engag**ement **wi**th **a** **CFP**® **profes**sional, **ho**w **sho**uld **th**e **profes**sional **tre**at **th**e **relatio**nship?
**Tre**at **i**t **a**s **a** **finan**cial **plan**ning **engage**ment.
79
**Wha**t’s **th**e **maxi**mum **fi**ne **th**e **CF**P® **Boa**rd **ca**n **imp**ose **o**n **a** **CF**P® **profess**ional?
**$0**.
**Th**e **CF**P® **Boa**rd **can**not **imp**ose **fin**es.
80
**I**f **ask**ed **ho**w **a** **CF**P® **profess**ional **ca**n **red**uce **ri**sk **wit**hin **the**ir **pract**ice, **wh**at **sho**uld **co**me **t**o **min**d?
**Th**e **beha**vior **o**f **th**e **CF**P® **profess**ional.
**Act**ing **a**s **a** **fiduc**iary **an**d **adhe**ring **t**o **th**e **CF**P® **Boar**d’s **Co**de **o**f **Eth**ics **an**d **Stand**ards **o**f **Cond**uct **i**s **th**e **be**st **wa**y **t**o **miti**gate **ris**k.
81
**Undergr**aduate **an**d **grad**uate **stud**ents **ar**e **bo**th **elig**ible **fo**r **th**e **\_\_\_\_**\_\_\_\_ **cred**it?
**Life**time **Learn**ing.
**Th**e **Amer**ican **Opport**unity **Ta**x **Cre**dit **i**s **on**ly **fo**r **undergr**aduate **stude**nts.
82
**Wh**at **i**s **th**e **maxi**mum **amo**unt **o**f **th**e **Life**time **Lear**ning **Cred**it?
**$2,0**00.
**Reme**mber **th**at **th**is **cre**dit **i**s **20**% **o**f **elig**ible **expe**nses **u**p **t**o **$10,**000.
83
**Wh**en **thin**king **abo**ut **excep**tions **t**o **th**e **Inves**tment **Advi**sers **Ac**t **o**f **194**0, **wh**at **do**es **th**e **acro**nym **LA**TE **repre**sent?
* *Lawy**ers.
* *Accoun**tants.
* *Teac**hers.
* *Engin**eers.
84
**Nee**ds **bas**ed **educat**ion **assis**tance **prog**rams **incl**ude:
* *Pe**ll **Gra**nts.
* *Subsi**dized **Staf**ford **Loa**ns.
* *Perk**ins **Loa**ns.
* *FSE**OG **(Fed**eral **Supple**mental **Educat**ional **Opport**unity **Gra**nt).
85
**Non-n**eeds **bas**ed **educat**ional **assis**tance **prog**rams **incl**ude:
* *Unsubs**idized **Staf**ford **Loa**ns.
* *PL**US **Loa**ns.
86
**johnjames**.com/CFP **I**s **th**is **accept**able?
**Ye**s.
**Th**e **ma**in **UR**L **ca**n **no**t **incl**ude **th**e **CF**P® **mar**ks (**johnjame**scfp.com **wou**ld **b**e **consi**dered **t**o **b**e **impr**oper **us**e).
87
**Ho**w **wou**ld **yo**u **desc**ribe **th**e **sha**pe **o**f **a**n **inela**stic **cur**ve?
**Relat**ively **verti**cal.
**Beca**use **dem**and **chan**ges **minim**ally **du**e **t**o **chan**ges **i**n **pri**ce, **th**is **crea**tes **a** **ste**ep **cur**ve **o**n **a** **price/q**uantity **cha**rt. **A** **go**od **wa**y **t**o **reme**mber **th**is **i**s **t**o **thi**nk **o**f **th**e **“I**” **i**n **inela**stic **a**s **repres**enting **th**e **ste**ep **cur**ve.
88
**Wh**at **ar**e **3** **ass**ets **o**f **th**e **par**ent **wh**en **calcul**ating **th**e **Expe**cted **Fam**ily **Contri**bution **fo**r **finan**cial **ai**d?
* *Cover**dell **Educa**tion **Sav**ing **Acco**unts.
* *Prep**aid **Tuit**ion.
* *52**9 **Savi**ngs **Pla**ns.
89
**Advi**sors **wi**th **ass**ets **i**n **exc**ess **o**f $110,000,000 **mu**st **regi**ster **wi**th **th**e **\_\_\_\_\_**\_\_\_?
**Th**e **SE**C.
**Advi**sors **wi**th **ass**ets **bel**ow 100M **mu**st **regi**ster **wi**th **th**e **sta**te. **Advi**sors **ha**ve **a** **cho**ice **betw**een **th**e **sta**te **o**r **th**e **SE**C **i**f **th**ey **fa**ll **betw**een 100M and 110M.
90
**I**n **wh**at **situa**tion **ca**n **a**n **inves**tment **advi**sor **ad**d **th**e **init**ials “**RI**A” **aft**er **the**ir **nam**e?
**Nev**er.
**Th**e **SE**C **prohi**bits **th**is **acti**on.
91
**I**n **wh**at **sta**ge **o**f **th**e **busi**ness **lifec**ycle **wou**ld **yo**u **se**e **ris**ing **unempl**oyment **rat**es?
**Dur**ing **a** **contra**ction.
92
**Wh**at **i**s **th**e **ne**t **wor**th **o**f **a**n **accre**dited **inves**tor?
**$1**M **no**t **inclu**ding **th**e **inves**tor’s **pers**onal **resid**ence.
93
**Wh**at **do**es **UIAD**PIM **repre**sent?
**Th**e **Prac**tice **Stand**ards.
**Yo**u **ar**e **goi**ng **t**o **ne**ed **t**o **kn**ow **th**e **corr**ect **sequ**ence **o**f **eve**nts **i**n **th**e **Prac**tice **Stand**ards **an**d **yo**u **wi**ll **al**so **ne**ed **t**o **kn**ow **wh**at **happ**ens **i**n **ea**ch **ste**p.
**A**s **a**n **exam**ple, **yo**u **ma**y **b**e **ask**ed, **“I**n **whi**ch **st**ep **o**f **th**e **Prac**tice **Stand**ards **wou**ld **a** **CF**P® **profes**sional **addr**ess **unreal**istic **goal**s?” **Answ**er: **Identi**fying **an**d **Selec**ting **Goa**ls.
94
**“**I **tr**y **no**t **t**o **thi**nk **abo**ut **m**y **fina**nces **beca**use **i**t **stre**sses **m**e **out**.” **Th**is **state**ments **refl**ects **some**one **wh**o **ha**s **wh**at **mon**ey **beli**ef?
**Mon**ey **avoid**ance.
95
**A** **“kee**ping **u**p **wi**th **th**e **Jone**ses” **menta**lity **cou**ld **b**e **class**ified **a**s **hav**ing **whi**ch **mon**ey **beli**ef?
**Mon**ey **stat**us.
**The**se **indivi**duals **ha**ve **a** **tend**ency **t**o **spe**nd **mon**ey **t**o **ke**ep **u**p **th**e **appea**rance **o**f **enjo**ying **succ**ess.
96
**Peo**ple **wh**o **beli**eve **th**at **mon**ey **equa**tes **t**o **happi**ness **o**r **mon**ey **wi**ll **sol**ve **the**ir **prob**lems **oft**en **ha**ve **wh**at **ty**pe **o**f **mon**ey **beli**ef?
**Mon**ey **wors**hip.
**The**se **indivi**duals **wi**ll **oft**en **overs**pend **i**n **a**n **atte**mpt **t**o **cre**ate **happi**ness.
97
**Wh**at **sta**ge **o**f **th**e **busi**ness **lifec**ycle **wou**ld **yo**u **se**e **surg**ing **infla**tion, **a** **hi**gh **GD**P, **an**d **lo**w **unemplo**yment?
**A** **pea**k.
**A**t **th**is **sta**ge **o**f **th**e **busi**ness **cyc**le, **th**e **fede**ral **rese**rve **ma**y **beg**in **t**o **rai**se **inte**rest **rat**es **i**n **a**n **eff**ort **t**o **cu**rb **ris**ing **infla**tion.
98
**Ho**w **ma**ny **consec**utive **mon**ths **o**f **decli**ning **GD**P **indic**ates **a** **reces**sion?
**6** **mon**ths **/** **2** **quart**ers.
**Aft**er **6** **quar**ters **o**f **decli**ning **GD**P, **th**e **econ**omy **wou**ld **ent**er **a** **depres**sion.
99
**Wh**at **ar**e **th**e **thr**ee **too**ls **avail**able **t**o **cong**ress **t**o **influ**ence **fis**cal **poli**cy?
* *Spen**ding.
* *De**bt **manag**ement.
* *Taxa**tion.
**Ma**ke **su**re **no**t **t**o **conf**use **th**is **wi**th **mone**tary **pol**icy **whi**ch **i**s **contr**olled **b**y **th**e **Fede**ral **Rese**rve
100
**Soc**ial **Secu**rity **ma**y **al**so **b**e **refe**rred **t**o **a**s **\_\_\_\_\_**\_\_\_?
**OAS****DI****(o**ld**ag**e,**surv**ivor**an**d**disab**ility**benef**its).
**Th**e **ex**am **ma**y **us**e **the**se **ter**ms **intercha**ngeably.
101
**Wh**at **i**s **consi**dered **t**o **b**e **“ca**sh” **o**r **“ca**sh **equiva**lents” **fo**r **th**e **purp**ose **o**f **revie**wing **a** **clie**nt’s **bala**nce **she**et?
**Che**cking **accou**nts, **savi**ngs **accou**nts, & **mon**ey **mar**ket **accou**nts, **certif**icates **o**f **depo**sits **wi**th **le**ss **th**an **1**2 **mon**ths **t**o **matur**ity.
102
**Wha**t’s **th**e **ru**le **o**f **thu**mb **fo**r **th**e **amo**unt **nee**ded **i**n **a**n **emerg**ency **fun**d?
**Betw**een **3-**6 **mon**ths **o**f **no**n **discret**ionary **expen**ses.
**I**f **refer**ring **t**o **a** **sin**gle **indivi**dual, **th**e **amo**unt **i**s **typic**ally **clo**ser **t**o **6** **mont**hs. **I**f **refer**ring **t**o **a** **marr**ied **indiv**idual **(wh**ere **bo**th **indivi**duals **ar**e **work**ing) **th**e **amo**unt **i**s **clo**ser **t**o **3** **mont**hs.
103
**Maxi**mum **amo**unt **avail**able **fo**r **th**e **Amer**ican **Opport**unity **Ta**x **Cred**it?
**$2,5**00.
**Reme**mber **th**at **th**e **fir**st **$2,**000 **i**s **a** **dol**lar-**for**-**dol**lar **cred**it. **Th**e **ne**xt **$2,**000 **i**s **cred**ited **a**t **25**%.
**Exam**ple: **elig**ible **expe**nses **o**f **$4,**000 **wou**ld **qual**ify **fo**r **th**e **fu**ll **$2,5**00, **whi**le **elig**ible **expe**nse **o**f **$3,**000 **wou**ld **qual**ify **fo**r **a** **$2,**250 **cre**dit **(fi**rst **$2,**000 **a**t **100**%, **ne**xt **$1,**000 **a**t **25**% **=** **$2,2**50).
104
**Ca**n **yo**u **ta**ke the **fu**ll **Amer**ican **Opport**unity **Ta**x **Cre**dit **an**d **th**e **fu**ll **Life**time **Lear**ning **Cre**dit **i**n **th**e **sa**me **yea**r?
**No**.
**Whi**le **th**e **ex**am **ma**y **no**t **as**k **th**is **ques**tion **specifi**cally, **th**ey **ma**y **as**k **yo**u **t**o **calcu**late **th**e **maxi**mum **cre**dit **avail**able **fo**r **a** **stud**ent **wh**o **i**s **elig**ible **fo**r **th**e **AO**TC **an**d **th**e **Life**time **Lear**ning **Cred**it.
**Cho**ose **th**e **opt**ion **th**at **wi**ll **prov**ide **th**e **mo**st **assis**tance **t**o **th**e **stud**ent.
