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Fundamentals Flashcards

1
Q

Conduct deemed unacceptable bar definition

A

always bar an individual from being certified
- NO recourse

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2
Q

Conduct deemed unacceptable bar list

A
  • theft, embezzlement, tax fraud & other financial/tax crimes
  • felony conviction of any degree or murder/rape EVER
  • violent crime within 5 yrs
  • revocation of financial professional license
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3
Q

Conduct deemed presumptive bar definition

A

behavior ‘presumed’ unacceptable and will bar certification
- unless individual pteitions Discplinary & Ethics Commission (DEC)

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4
Q

Conduct deemed presumptive bar list

A
  • two+ personal/business bankruptcies
  • felony of violent crimes (not murder/rape) occurred >5yrs ago
  • nonviolent crimes (perjury,etc within 5 yrs)
  • revocation/suspension of nonfinancial professional license
  • suspension of financial professional license
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5
Q

Dodd-Frank Act assets < $100mil

A

register with the state
- midsized investors have assets between $25mil-$100mil

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6
Q

Dodd-Frank Act assets > $110mil

A

register with SEC

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7
Q

Dodd-Frank Act assets between $100-$110mil

A

choice to register with state or SEC

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8
Q

To register with SEC, you need to file

A

Form ADV

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9
Q

To withdraw registration from SEC, you need to file

A

Form ADV-W

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10
Q

RIA must file ____ and ____ annually

A
  • ADV Part 1
  • Schedule I
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11
Q

Form ADV Part 1 A & B (not part of client brochure)

A

firm name
- background (Executives)
- U4 marks for firm and stake holders

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12
Q

Form ADV Part 2 A & B (makes up client brochure)

A

firm and advisor info
- compensation and fees
- education
- investment objectives & strategies
- conflicts of interest (proprietary funds)

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13
Q

Form ADV Part 3

A
  • client ‘relationship’ summary (aka CRS)
  • help retail investors understand differences between brokers & advisors
  • written in plain English, concise, provide certain meaningful & accurate info about firm/financial professionals/services it offers retail investor clients/customers
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14
Q

Exceptions to Registration definition

A

those who don’t need to register and not regulated by Advisors Act

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15
Q

Exceptions to Registration list (TABLE)

A

teachers
- accountants
- broker/dealer & banks (advisory services solely incidental to conduct business)
- lawyers
- engineers

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16
Q

Exemptions to Registration definition

A

meet definition of investment adviser but do not need to register
- are subject to anti-fruad provisions of Advisers Act
- do NOT provide advice, services, analysis/reports regarding nationally listed securities
- do NOT provide advice about securities traded on national exchange

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17
Q

Exemptions to Registration list (VIPs are SaFE from exemptions)

A
  • Venture Capital Funds
  • Insurance companies
  • Private funds < $150mil
  • Foreign advisors without place of business in US
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18
Q

The Brochure Rule (compliance accomplished by ADV Part 2) requires written disclosure to every client regarding:

A
  • advisory services/fees
  • types of securities
  • education & business standards
  • participation/interest in securities transactions
  • conditions for managing accounts
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19
Q

Registers with FINRA using what form

A

Form U-4

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20
Q

Shift in Demand Curve list

A

income
- taxes
- savings rate
- disposable income

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21
Q

Shift in Demand Curve: Increase in Income

A

more in pocket = right shift

22
Q

Shift in Demand Curve: Increase in Taxes

A

less in pocket = left shift

23
Q

Shift in Demand Curve: Increase in Savings Rate

A

less in pocket = left shift

24
Q

Shift in Demand Curve: Increase in disposable income

A

more in pocket = right shift

25
Quantity Demanded
anytime change in price - movement along demand curve
26
Quantity Supplied
movements along supply curve due to price change - price decrease = firms inclined to supply less - price increase = firms inclined to supply more
27
Shift in Supply Curve list
technology - competition - anything other than price
28
Shift in Supply Curve: Increase in Technology
down to the right
29
Shift in Supply Curve: Increase in Competition
down to the right
30
Gross Domestic Product made up of 4 main areas
consumer spending - gov spending - business investing - net import & exports
31
Monetary Policy is established by
Fed Reserve
32
Monetary Policy & Fiscal Policy three main goals
maintain LT economic growth - maintain price levels supported by economy - maintain full employment
33
Fiscal Policy definition
policy & means by which Congress controls spending and taxation, which influences money supply and interest rates
34
Monetary Policy: Open Market (Buy Securities)
increase money supply - decrease interest rate
35
Monetary Policy: Open Market (Sell Securities)
decrease money supply - increase interest rate
36
Fiscal Policy three tools
taxation - spending - debt management
37
Bankruptcy: Chp 7 definition
relief through liquidation - get rid of debt permanently
38
Bankruptcy: Chp 7 debts NOT discharged
- 3 years of back taxes - alimony - child support - student loans
39
Bankruptcy: Chp 11 definition
relief through reorganization for business/self employed
40
Bankruptcy: Chp 13 definition
relief through adjusting debt
41
Workers Compensation: Is subject to income tax? (Y/N)
not subject to income tax
42
Unemployment Compensation: Is subject to income tax? (Y/N)
IS INCLUDED in income tax
43
Debt ratios & Debt analysis definition
indicates how well a person manages their debt
44
Performance ratios definition
assesses financial flexibility of client as well as client's progress towards goals
45
Emergency fund formula
current assets / monthly nondiscretionary expenses
46
Student Loan: Pay as you earn repayment
- monthly student loan repayment 10% discretionary income - remaining debt forgiveness after 20 yrs - only direct fed loans & graduate PLUS loans eligible
47
Student Loan: income based repayment (IBR)
- monthly student loan repayment of 15% of discretionary income - reamining debt forgiveness after 25yrs - most federal (except parent PLUS) loans eligible
48
Student Loan: Income contingent repayment (ICR)
- monthly student loan repayment of 20% discretionary income - remaining debt forgiveness after 25yrs - only debt federal loans & graduate PLUS loans eligible
49
Consumer Price Index used to forecast:
- potential future inflation
50
Consumer Confidence Index used to forecast:
- consumer behavior
51
Index of Leading Economic Indicators used to forecast:
- economic expansions and contractions
52
Fair Credit Reporting Act (FCRA) is a provision that
- requires all credit reports contain accurate, relevant, and current information - allows individuals to challenge info deemed incorrect

CFP (9 decks)

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