Fundamentals

Question 1

Investment advisor defined as

Answer 1

Business of advice for compensation (A,B, C)

Question 2

Fiduciary duties

Answer 2

Duty of:
Loyalty
Care
Follow client instructions

Question 3

Code of Ethics

Answer 3

Act with honesty integrity competence and diligence
Act in best interests of clients
Exercise due care
Avoid or disclose conflicts of interest
Maintain the confidentiality and privacy of clients
Act in a manner that reflects positively on cfp

Question 4

Exceptions to registration with SEC

Answer 4

TABLE
Teachers
Accountants
Brokers
Lawyers
Engineers

Question 5

Exemptions from registration

Answer 5

VIP are SaFE
Venture capital
Insurance
Private funds less than &150MM
home State (no nationally listed securities)
Foreign advisors
not on a national Exchange

Question 6

What goes on a brochure

Answer 6

The advisory services and fees
Types of securities
Education background
Interest in securities
Material changes given annually

Question 7

Life insurance benchmark

Answer 7

10-16x income

Question 8

Health insurance benchmark

Answer 8

1MM Lifetime cap pre ACA

Question 9

Disability benchmark

Answer 9

If after tax then 60-70% gross income

Question 10

Property (home and auto) benchmark

pLUP benchmark

Answer 10

Cover fair market value

Olio 1-3MM

Question 11

Housing ratio smaller

Answer 11

Housing mortgage PITI < 28% of gross

Question 12

Debt ratio

Answer 12

All debt payments together < 36%

Question 13

Education funding

Answer 13

3, 6, 9 thousand/year for a public, semi private, competitive private school

Question 14

Retirement amount and savings rate

Answer 14

16 times amount needed in retirement income

10-12% assuming starting early

Question 15

Standard deviation for diverse portfolio

Answer 15

8-14%

Question 16

Legacy big 3 documents

Answer 16

Will
Durable power of attorney for healthcare
Advanced medical directive

Question 17

Recession timing characteristics

Answer 17

6 months / 2 quarters declining GDP

Question 18

Depression timing characteristics

Answer 18

18 months/6 quarters gdp

Question 19

Federal reserve interest rate control

Answer 19

Overnight interest rate banks borrow to hit reserve requirements

Question 20

Monetary policy
Reserve requirement
Discount rate
Treasuries in open market
Excess reserve rate

Answer 20

Contractionary:
Increase in reserve requirement
Increase in discount rate
Sale of treasuries
Increase in excess reserve rate

Opposite for expansionary

Question 21

Congress 3 tools

Answer 21

Taxation
Spending
Debt management

Question 22

Max liability for stolen card? (Fair credit billing act)

Answer 22

$50 each card

Question 23

Chapter 7 debts not discharged

Answer 23

Stud and and gov loans
3 years of back taxes
Alimony and child support
Monies owed due to malicious acts

Question 24

Assets protected from bankruptcy

Answer 24

Homestead
Life insurance
Qualified plans

Question 25

Federal Pell Grant

Answer 25

Needs based | Must not have earned a bachelors or professional degree

Question 26

Stanford Loan | And subsidized vs unsubsidized

Answer 26

Primary aid from us dept of education Start 6 months after leaving school Subsidized means interest in paid by gov while in school and is needs based Not used when parents want to repay

Question 27

Parent loans for undergraduate students (plus)

Answer 27

Parent taking on loan for child Used for people with income but not savings

Question 28

Pure risk

Answer 28

Chance of loss or no loss and nothing else

Question 29

Speculative risk

Answer 29

Chance of profit, loss or no loss

Question 30

What is a peril

Answer 30

Actual cause of loss (fire, wind, burglary, etc)

Question 31

What are the 3 hazard types and define them

Answer 31

Moral - character flaw (false claim) Morale - indifference because insured (not locking door) Physical - tangible condition increasing odds of peril (icy roads)