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CFP extras > Fundamentals > Flashcards

Fundamentals Flashcards

1
Q

Accredited Investor

A

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

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2
Q

Registration Exception

A

TABLEs are incidental
Teachers
Accountants
Brokers
Lawyers
Engineers

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3
Q

External Environment

A

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

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4
Q

Big Three Legacy Docs

A

Will
Durable Power of Attorney
Advanced Medical Directive

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5
Q

Causes of Shift in Demand Curve

A

Income
Taxes
Savings Rate
Disposable income

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6
Q

Axes of Supply and Demand Curves

A

Y: Price
X: Quantity
Prices go Up and Down

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7
Q

Causes of shift in Supply Curve

A

Technology
Competition
Anything other than price

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8
Q

Normal yield curve shape

A

Concave: up and to the right

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9
Q

Inverted yield curve shape

A

Convex: downward to the right

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10
Q

FICO score range and goal

A

350 - 850
760 or higher

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11
Q

Client internal data

A

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

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12
Q

Life Cycle factors

A

Age
Marital status
Dependents
Income & Net Worth

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13
Q

If the exam gives combined fixed and variable expenses

A

Use as substitute for nondiscretionary expenses

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14
Q

Buy or rent a home

A

Rent if < 3 years or client in low tax bracket

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15
Q

Education Financial Need

A

Tuition/Cost of Attendance minus Expected Family Contribution

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16
Q

Life insurance needed

A

10-16x gross pay

17
Q

Disability insurance needed

A

60-70% gross pay

18
Q

Property insurance needed (Home & Auto)

A

< or = FMV

19
Q

LTC insurance needed

A

36-60 months

20
Q

PLUP needed

A

$1-$3 million

21
Q

Emergency Fund needed

A

3-6 months Non-discretionary expenses

22
Q

Housing ratio

A

Mortgage (PITI) <28% gross pay

23
Q

Housing + All Other Debt Ratio

A

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

24
Q

Education funding needed

A

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

25
Q

Retirement income needed/age

A

16x pre-retirement income by age 62-65

26
Q

Retirement savings rate target %

A

10-12% for retirement

27
Q

Reasonable rate of return for retirement

A

8-10%

28
Q

Benchmark standard deviation for a diversified portfolio

A

8-14%

29
Q

FDIC Limit

A

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

30
Q

4 types of FDIC accounts

A

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

31
Q

Property exempt from bankruptcy

A

Homestead, life insurance, qualified plans

32
Q

Consumer debt payment level

A

Shouldn’t exceed 20% of net income

33
Q

Savings Ratio < age 32

A

10-12%

34
Q

Savings Ratio age 45-50

A

20-25%

CFP extras (4 decks)

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