Fundamentals

Question 1

Accredited Investor

Answer 1

1,2,3 Test
$1 million or $200,000 of income if single, or $300,000 of spousal income

Question 2

Registration Exception

Answer 2

TABLEs are incidental
Teachers
Accountants
Brokers
Lawyers
Engineers

Question 3

External Environment

Answer 3

Present opportunities and threats, such as change in interest rates.

Question 4

Big Three Legacy Docs

Answer 4

Will
Durable Power of Attorney
Advanced Medical Directive

Question 5

Causes of Shift in Demand Curve

Answer 5

Income
Taxes
Savings Rate
Disposable income

Question 6

Axes of Supply and Demand Curves

Answer 6

Y: Price
X: Quantity
Prices go Up and Down

Question 7

Causes of shift in Supply Curve

Answer 7

Technology
Competition
Anything other than price

Question 8

Normal yield curve shape

Answer 8

Concave: up and to the right

Question 9

Inverted yield curve shape

Answer 9

Convex: downward to the right

Question 10

FICO score range and goal

Answer 10

350 - 850
760 or higher

Question 11

Client internal data

Answer 11

Life Cycle
Attitudes & Beliefs
Special Needs
Financial Position
Client Perception of Financial Position

Question 12

Life Cycle factors

Answer 12

Age
Marital status
Dependents
Income & Net Worth

Question 13

If the exam gives combined fixed and variable expenses

Answer 13

Use as substitute for nondiscretionary expenses

Question 14

Buy or rent a home

Answer 14

Rent if < 3 years or client in low tax bracket

Question 15

Education Financial Need

Answer 15

Tuition/Cost of Attendance minus Expected Family Contribution

Question 16

Life insurance needed

Answer 16

10-16x gross pay

Question 17

Disability insurance needed

Answer 17

60-70% gross pay

Question 18

Property insurance needed (Home & Auto)

Answer 18

< or = FMV

Question 19

LTC insurance needed

Answer 19

36-60 months

Question 20

PLUP needed

Answer 20

$1-$3 million

Question 21

Emergency Fund needed

Answer 21

3-6 months Non-discretionary expenses

Question 22

Housing ratio

Answer 22

Mortgage (PITI) <28% gross pay

Question 23

Housing + All Other Debt Ratio

Answer 23

Mortgage (PITI) + all other recurring debt payments <36% gross pay

Question 24

Education funding needed

Answer 24

$3k public; $6k/semi-private; $9/k private

Question 25

Retirement income needed/age

Answer 25

16x pre-retirement income by age 62-65

Question 26

Retirement savings rate target %

Answer 26

10-12% for retirement

Question 27

Reasonable rate of return for retirement

Answer 27

8-10%

Question 28

Benchmark standard deviation for a diversified portfolio

Answer 28

8-14%

Question 29

FDIC Limit

Answer 29

Each depositor has a total of $250,000 of insurance per type of account ownership.

Question 30

4 types of FDIC accounts

Answer 30

Individual accounts. Joint accounts. Trust accounts. Self-directed retirement accounts

Question 31

Property exempt from bankruptcy

Answer 31

Homestead, life insurance, qualified plans

Question 32

Consumer debt payment level

Answer 32

Shouldn't exceed 20% of net income

Question 33

Savings Ratio < age 32

Answer 33

10-12%

Question 34

Savings Ratio age 45-50

Answer 34

20-25%