General Principles Flashcards
(18 cards)
What are the allowable CFP nouns?
Professional, practitioner, certificant, mark, exam, certification
How do you determine a business’s capitalization value?
Annual income/capitalization rate
What is a pro forma statement?
Shows expected future business profitability
What items from cash flow increase net worth?
Mortgage paydowns and cash surpluses
How do you determine a person’s current emergency fund?
Savings and checking account balances in excess of monthly expenses
Reverse mortgage
Only available to homeowners 62 years and older living in condos or single family homes
No income qualifications
Not repaid until borrower moves out
Home doesn’t have to be owned free and clear to qualify
Payments do not affect Medicaid eligibility as long as they are spent in same month as received
Proceeds are tax free
American Opportunity Credit
$2,000 plus 25% of next $2,000 of qualified expenses ($2,500 max per student)
Includes tuition, fees, and course material (not room and board)
MAGI phaseouts
First four years of college only
Student must be at least half of normal full time student load
Cannot be claimed for the same student expenses in the same year as Lifetime Learning Credit
Student cannot have felony drug conviction
Lifetime Learning Credit
20% of the first $10,000 of qualified expenses ($2,000 max per family)
Includes tuition, fees, and course material (not room and board)
Applies to all expenses paid by the taxpayer for all eligible students
MAGI phaseouts
Undergraduate, graduate school, continuing education
No felony drug conviction restriction applies
Grants for wealthy students and income cap
> 70k income cap
Parent loan for undergraduate students
Grants for poor students and AGI income cap
< 70k income cap
Pell grants
Supplemental Education Opportunity Grant
Subsidized Stafford Student Loans
Series 6
sales of mutual funds, new UTIs, variable life insurance, variable annuities, and 529 plans
Series 7
sales of securities including UITs on the secondary market other than commodities and certain options and closed end mutual funds
Series 63
licensing in other states other than own state
Series 66
series 65 and 63 combined
NPV
The greater the NPV, the higher the return
If positive, then IRR is greater than required rate of return
If negative, then IRR is less than required rate of return
If equal to zero, then IRR equals required rate of return
Dollar weighted return
Calculate IRR (withdrawals and additions matter)
Nj key for serial payments
Enter value, CFj, number of times that value occurs, Nj
When begin mode is appropriate
college tuition paid, retirement benefits received, family needs
