GP

Question 1

Leading Economic Indicators

Answer 1

1. Initial claims for unemployment insurance
2. New manufacturing orders
3. New private housing units
4. Stock prices, 500 common stocks
5. Index of consumer expectations

Money supply
Interest rate spread
Avg weekly hours for production workers in manufacturing

Question 2

Coincident Indicators

Answer 2

1. Industrial production

Question 3

Lagging Indicators/Confirming Indicators

Answer 3

1. Avg duration of unemployment
2. Avg prime rate charged by banks
3. Commercial and Industrial loans outstanding

Question 4

Gross Domestic Product GDP

Answer 4

• US economy’s total production of goods and services.
• Measures the dollar value of all final goods and services NEWLY produced within the country’s boundaries.
• GDP counts economic activity without regard to yearly price fluctuations (inflation)

Question 5

Consumer Price Index CPI

Answer 5

“Market basket” of selected good and services in various cities across the country

Question 6

CPI has 8 major categories

Answer 6

• Food & Beverages
• Apparel
• Education & Communication
• Housing
• Transportation
• Other goods & services
• Recreation
• Medical care

Question 7

Producer Price Index

Answer 7

• Index of the price of various items such as farm products and industrial commodities.
• Does not include the value of services as does the CPI.
• Leading indicator of inflation trends is PPI

Question 8

Inflation

Answer 8

Too much money chases too few goods

Question 9

Deflation

Answer 9

The decline in the price of goods and services

Question 10

Stagflation

Answer 10

The combination of slow economic growth and high unemployment with rising prices

Question 11

Monetary policy

Answer 11

Action taken by the Federal Reserve to influence the growth of the money supply

Question 12

Fed Action

Answer 12

• Reserve requirements
• Discount Rate
• Open market operations
• Margin rates

Question 13

Mortgage Calculations for full life of loan

How much interest was paid during the life of an $80.000 loan at 9.75% interest and a 30-yr term?

Answer 13

Step 1:Solve for payment
12#End
PV: -80,000
N:30
I:9.75
Pymt=$687.32
**Step 2: payment x # of payments **
687.32 x 12x 30=247,435.2
Step3: subtract loan amount to find total interest paid
247,435.2- 80,000 (loan)

Question 14

Definition of an Investment Advisor

Answer 14

1. A person who provides ADVICE
2. A person who is in the BUSINESS
3. A person who provides services for COMPENSATION

ALL 3 MUST APPLY

Question 15

Exceptions to filing as an Investment Advisor

Answer 15

BLEAT
* Bank
* Lawyer
* Engineer
* Accountant
* Teacher

All of these who’s advisory services is solely incidental to the practice of their profession

Question 16

Investment Advisor registration with the SEC

Answer 16

• Files an ADV form with SEC
• Pays filing fee of $150 minimum
• Submits ADV Part 1 and Schedule 1 updates annually