Tutor Q Bank Flashcards
(148 cards)
1
Q
Rules on 2 Agents Splitting the commission on a client
A
Doesn’t - have to be in writing
Doesn’t - Need Client Approval
Does - Need to not Increase the overall cost to the client
Does - Need to be by agents who are in the same company
OR
Agents who are in the same Direct/Indirect Common Control (Parent company’s Family)
2
Q
Common Control
A
Parent Company Owning 1 or more child companies
Agents splitting commissions need to be within the same common control
3
Q
Test Tip:
Especially with law questions, always think of which rule they are quizzing you on (That can help narrow down the choices)
A
Test Tip:
Especially with law questions, always think of which rule they are quizzing you on (That can help narrow down the choices)
4
Q
Requirements for 3rd party trading Authorization
A
Must be in writing from the client themself
(Oral is NEVER accepted)
(Email is accepted because that’s a form of writing)
OR
From some type of Court Order
5
Q
When you See NASAA think
A
State level Not Federal
6
Q
Performance Based Fee
A
!!!Different from participating in the Gains/Losses of Client Account
ie: if you get a client a +10% return then you charge an additional fee of ___% for all the returns above that amount
Only based upon the gains of the account never the losses
7
Q
State Requirements for a
Performance Based Fee
A
Client Must have:
$1.1 million in AUM (with you) for that single account
OR
$2.2 million in Net Worth
8
Q
$ amount of Net Capital Required in most states for a IA with Custody of clients Funds
A
$35k
(probably wont be directly tested on in the test)
9
Q
Right of Recission
A
Undoing something you did for your client
They cant take legal action if they agree
You must pay back all $ with interest to them
If client doesn’t respond to it within 30 days the right is terminated
10
Q
In What Time Frame Must
Advisors Send Clients Statements
A
Quarterly
11
Q
When Must an IA do a surprise Audit
A
1/year
and only if they have custody of clients funds
12
Q
How long do IA need to keep Copies
All Confirmations Sent To Client
A
For 3 years
(I’m assuming that from time the Confirmation was sent to client)
13
Q
How long do IA need to keep Copies
All Communications Sent To Client
A
Forever
until
5 years after the clients account has been closed
14
Q
How Frequently do
IA Manuels need to be reviewed
A
Once Per Year
ALL IA MANUELS
15
Q
What types of
education requirements
do IA’s need to disclose in their manuals
A
Any Continuing Education Requirements
NOT any prior employment education that was required
(if the employee got the job they already looked into that)
16
Q
IA - Rules on Showing Off their
Clients Account Performance
in promotional materials
A
Cannot - State the specific performance of a single account/client
Can - State their overall AVERAGE performance (not client/account specific)
Should be backed up with disclosure that past performance doesn’t guarantee future performance
(Cannot be specific to a client or account - otherwise they could just cherry-pick their best performers)
17
Q
IA - When ok to
Disclose Clients Accounts Info
A
Either:
-Court Orderd
or
-Client gives permission IN WRITTING
(but still cant use that in promotional materials)
18
Q
IA send a buy order to BD that bundles multiple client accounts
During the transaction process the Price of the security fluctuates a couple times
How does the BD Distribute those price changes back to the IA’s Clients
A
Each Client gets the:
AVERAGE COST BASIS
for the transaction
(basically they average out the changes during trading to all the clients so that its fair)
19
Q
3 Types of Suitability
A
1) Reasonable Basis - Basic Info gathered about the client (ie: a Fact Finder or getting to know them)
2) Client Specific - Info unique to the client that may conflict with their reasonable basis (ie: they are really old but love gambling in the market)
3) Quantitative - Extra info you can infer/ make additional conclusions on based on their Reasonable Basis (ie: they wont tell you their salary but you know they are a CEO of a huge company, you infer that they have a large salary)
20
Q
Does the Client have to tell you anything in order for you to work with them
A
No, you can just use the 3 types of suitability to learn about them as you go
21
Q
What type of Closed-End Funds can be redeemed not just traded in the Secondary Market
A
UIT’s
(still considered a closed-end fund though)
22
Q
What should you assume about Mutual Funds unless otherwise stated
A
they are Open-End Class A funds
(unless otherwise stated)
23
Q
Discounted Cash Flow
A
What a Cash Flow is actually worth after factoring in compounding Inflation
(less than the cash flow stated if there is inflation)
On questions that have you calculate it, remember to take out inflation from the interest payments and that that inflation is compounding year over year
24
Q
Do Trusts always pay the taxes before passing income on to beneficiaries?
A
No they CAN pay the taxes but dont HAVE to pay the taxes
they might also just pay a portion of the taxes
25
What is the Limit of # of Grantors, Beneficiaries, and trustees you can have on a trust?
NO Limit
(you can have unlimited amount of any of those on a trust)
26
Can a Day trading account be short Securities?
Yes
27
$250/$100 Political Contributions limits are rules for who?
Industry Professionals
(NOT everyday people)
28
the political Contributions limits ($250/$100) are for what period of time
Per election campaign
(they donate to the election campaign not the Individual)
29
RIETS 90% Taxable income Rule is for passing income on to beneficiaries. Is that Income being passed on PRETAX or POSTTAX
PRETAX
the beneficiary now has a tax liability for that dividend income
30
Ending Retained Earnings Formula
Ending RE = Beginning RE + (Net Income - Dividends (Also Known as The Current Years Retained Earnings))
Think of Retained Earnings like a Bucket of money and each year you might add more or less to it. Beginning Retained Earnings is whatever is left in the bucket at the start of the year from previous years
Easier Formula:
Ending RE = Whats left in the bucket from past years + this years RE that's added to the bucket
31
Beginning Retained Earnings
Last Years
Ending Retained Earnings
Think of Retained Earnings like a Bucket of money and each year you might add more or less to it. Beginning Retained Earnings is whatever is left in the bucket at the start of the year from previous years
32
On the test what is
Net Income
Either
Net Revenue
or
Net Earnings
(they flip-flop on the test just remember to use context to decide which it is for the test. In real life its always Net Revenue)
33
Net Profit Margin
Net Profit / Gross Revenue (Sales)
Net Profit on the test is Net Revenue
(usually sometimes its net Earnings)
34
Circulars
Flyers you hand out
for IA - any advertising materials given to MORE than 25 people may need to be filed with the state admin
(If Federal advisor its the same rule but filed federally)
35
Form Letters
Any advertising that's based off of a template
for IA - any advertising materials given to MORE than 25 people may need to be filed with the state admin
(If Federal advisor its the same rule but filed federally)
36
Radio/Tv Broadcasting in 2 different states
Which state/states has Jurisdiction?
Jurisdiction is not about which state the IA/BD is in but where it's being broadcast to
(where the broadcast originated - where was the radio tower that sent out the signal)
ie:
advisor lives in state A
But broadcast radio ads to State B exclusively
State B has jurisdiction of the advertisement
37
Newspaper/ Periodical in 2 different states
Which state/states has Jurisdiction?
Jurisdiction is not about which state the IA/BD is in but where it's being broadcast to
(where the Newspaper/ Periodical was)
if 2/3rds of the paper's circulation is outside of the IA/BD's resident state, their resident state admin DOES NOT have Jurisdiction
38
Net Assets
Means
Net Worth (or equity)
39
UTMA's ---> Can you:
-Buy on Margin
-Leverage
-Buy Leveraged ETF's
-Buy Options/ risky securities
-Buy on Margin - NO
-Leverage - NO
-Buy Leveraged ETF's - YES
-Buy Options/ risky securities - YES
the account can be invested however you want. It doesn't matter if its risky or not (if that's what the client wants)
BUT a minor cannot enter into contracts so taking out a loan (margin and Leveraging) is NOT allowed in UTMA
40
EBITDA
another word for Net Revenue
stands for
Earnings
Before
Interest
Taxes
Deductions
Amortization
41
The Full Income Statement Formula
Revenue - operating expense = Net Revenue (EBITDA)
-Taxes +-Interest +-Deductions +-Amortization = Net Earnings
- Dividend = Retained Earnings (for that time period only(refer to Ending/Beginning Retained Earnings))
42
10K
Companies Official Report
Filed Annually
43
10Q
Companies Official Report
Filed Quarterly
(except for 4th quarter becasue they file a 10k then)
44
8K
Report to SEC for anything "Newsworthy"
must be done within 4 days of the event
(anything newsworthy that may affect the actual health of the company/ its securities)
45
What type of management fee do hedge funds usually have
Performance based Fee
(because they are all about aggressive performance)
46
Are Hedge Funds usually:
-Registered / Unregistered
-Privately / Publically organized
UnRegistered
and
Privately Organized
47
On questions that ask if either A,B,C class shares should be used in a specific client situation what do you need to remember?
You have to actually calculate (or get a quantifiable estimate on) what the total fee wil be to the client
You CANT just look at time frame they plan to hold the shares
Also B class shares CDSC will start out equal or greater than A shares SC
48
Are Affiliated Persons and Control Persons the same thing?
NO!!!!!! (all controlled persons are affiliates, but not all affiliates are controlled persons)
Affiliated - Director, Officer, employee, or 5% ownership of company
Control - Director, Officer, or 10% ownership of company
(if the question asks under the:
-Investment Advisers Act of 1940
or
-Investment Company Act of 1940
its changed to 25%)
49
Face Amount Certificate Company
Like a Zero Coupon Bond
Still considered an investment company and under Investment Company act of 1940
50
When swapping from one fund to another in the same company family is there a taxable event
Yes
(you would pay taxes on any gains from the previous security)
(unless there in a qualified account like 401k/IRA. on the test assume they are not though)
51
Fund has "Net Redemptions" means
More shares are being redeemed by fund than being bought
(has no impact on NAV)
52
Fund has "Net Purchases" means
More shares are being purchased by fund than redeemed
(has no impact on NAV)
53
When Auditors come in to audit books investors want to see
Qualified
or
UnQualified
Opinions
unqualified opinion
(qualified means they are uncertain about something in the financials)
54
If something is More Competitive that means
More people would buy them
(means the price is low)
55
Balance Sheet Net Worth would contain which of the following:
-Net Revenue
-Net Earnings
-Retained Earnings
Retained Earnings
(that's what the shareholders value comes from because its after all expenses and dividends its what they company has left over)
56
What is:
Paid in Capital
in an IPO
Its the Extra money the company gets above what the stock is worth
ie:
Price of stock:
$10
Par Value (what the stock is worth):
$1
Paid in Capital:
=$9
(its extra value in the sale the company gets)
57
Net Inventories goes up
means what is happening to sales
Sales are decreasing
(a general rule not exact or set in stone)
58
EDGAR
the online system where investors can go and access the financials of any listed company
59
Stagflation
High Inflation
+
High Unemployment
+
Low Demand in the Economy
a Tricky situation to create policies that will fix things for.
Usually fixing the low demand(growth) in the ecomony would cause even higher inflation and vis-versa
60
Performance Based Fee's
$1.1 million AUM requirement mean AUM with you the advisor or just 1.1 million in AUM that they have in general?
$1.1 Million AUM with you the Advisor
(they cant just have $1.1 million AUM total with multiple different advisors, it has to be with you)
61
What type of companies needs to file 10k 10Q and 8k forms
Ones that are publically traded
(Usually means they are Federally regisitered)
62
Are directors and officers considered Employees of the company
They can be an employee but just because they are a director or officer doesn't mean they are en employee
(basically No but they could be a Director/ Officer and an employee with a w2)
63
Definition of a "person"
Anyone/ entity that can open an account
64
3 Non-persons
1) A Minor
2) Deceased Individual
3) Individual Declared Mentally Incompetent
65
How long do the following need to keep their records:
IA
BD
IA - 5 years - 2 years Readily Accessible
BD - 3 years - 2 years Readily Accessible
(most records are 3 years)
66
State Registered IA's Record Requirement need to be met in which states
Only the state that their principal office is located
67
Are Record Requirements for the Fiscal year or calendar year
Fiscal Year
(means its not December 31st but 3 or 5 years from the date the record was created. that could be any day of the year.)
68
Uniformed Security Act:
When Does IA NOT need to register in a State
If all of these requirements are met:
1 - No Place of business in the State
2 - They only deal with Institutions in the State (Unless they are an Investment Companies or BD's -then they must register federally which means they notice file-)
3 - They deal with less than 5 Non-Institutions
69
Definition of Institution (its a list of different things)
Banks
Savings and Loan Associations
Insurance Companies
Investment Companies
Trust Companies
Employee Benefit Plans (with Assets of $1 million or more)
Government Agencies and Organizations
70
Is the Investment Advisor Act of 1940 a Federal or State Law
Federal
71
Whats a Word for:
Someone who is representing someone else
Agent
72
When can an IA use the term "Investment Council"
Their Principal business is acting as an IA
and
A Big Part of their Business is giving Continuous Management Services
(some IA's just sell a 1-time financial plan for a fee. they wouldn't be Investment Council)
73
Is a Trust Company Considered an IA
No
74
What Does Tenure Mean
Their Experience / How long they've been doing something
75
Systematic Risk
Changes in the overall economy will have an adverse effect on an investor's Securities
REGARDLESS OF SPECIFIC COMPANIES CIRCUMSTANCES
Cannot be avoided through Diversification
76
Market Risk
A Form of Systematic Risk
Changes in the overall economy will have an adverse effect on an investor's Securities
REGARDLESS OF SPECIFIC COMPANIES CIRCUMSTANCES
Cannot be avoided through Diversification
77
Unsystematic Risk
Changes in a Specific company will have an adverse effect on an investor's Securities
IS SPECIFIC TO AN INDIVIDUAL COMPANIES CIRCUMSTANCES
Can be avoided through Diversification
78
Business Risk
A Form of Unsystematic Risk
Changes in a Specific company will have an adverse effect on an investor's Securities
IS SPECIFIC TO AN INDIVIDUAL COMPANIES CIRCUMSTANCES
Can be avoided through Diversification
79
Interest Rate Risk
A Form of Systematic Risk
The Risk that Fluctuating Interest rates can have an adverse effect on investor securities
HURTS THE PRICE OF THE SECURITY
if something isnt able to be traded then it doesnt have interest rate risk
80
Reinvestment risk
A Form of Systematic Risk
An investor receives periodic income from an investment and risks not being able to reinvest that money at the same rate
81
Inflation Risk
A Form of Systematic Risk
Another word for Purchasing Power Risk
Risk of loosing spending power due to Inflation
82
Financial Risk
A Form of Unsystematic Risk
The risk that a company uses leveraging and then goes under because they can afford to pay it off which leads to a loss to the stockholders.
You don't have to be an owner of their debt security to have this risk (because the stockholders will get screwed too if the company goes under)
(according to Tutor, Financial risk is very broad and is just the risk that you might lose money in general -not sure if that's accurate-)
83
Credit Risk
A Form of Unsystematic Risk
Also, Know as Default Risk
Very similar to Financial Risk
The risk that the company will default on its debt obligation which hurts the owners of those debt securities
You HAVE to be an owner of their debt security to have this risk
(according to tutor its the risk that the credit quality of the issuer is low. low credit quality = higher interest they have to pay for investors to be wlling to take the risk -not too sure he;s right on that-)
84
If investor has a Letter of intent and doesnt contribute the money BUT the account appreciates to a $ they promised for the LOI do they still need to pay the promised contributions
YES
its about contributing X amount of money
NOT
the account growing to X amount
85
Equity RIET
Most Common Type of RIET
Invests in:
Real Estate Property
NOT
mortgages
86
Mortgage RIET
Invests in:
Mortgages
NOT
Real Estate Property
87
Hybrid RIET
Invests in:
Real Estate Property
AND
Mortgages
88
Leveraged RIET
Only type of RIET that can take out a mortgage when investing in a property
They are VERY risky
89
Options Spreads
The Opposite of a straddle
Buy a Call
and
Sell a Put
(or Sell a Call and Buy a Put)
in the same security
there are tons of different reasons why you would do a spread
90
What is typically used as a "sweetener" for a bond
a Warrant
91
Do most warrants Expire or last forever
Most of the expire
92
Are Forwards considered Derivatives
YES
they just aren't listed
93
Difference Between
an Annual Report
and
10k
the annual report usually talks about future plans for the company in addition to talking about the current company financials
10k - only talks about the current company financials
94
Cash Flow
Same thing as working capital (Basically)
Current Assets - Current Liabilities
95
How Do Prepaid Expenses affect the Balance Sheet and Income Statement
Its a Current Asset on the Balance sheet
---then once the expense comes due---
it turns into an expense on the income statement instead
96
List all Types of Systematic Risk
Market Risk
Interest Rate Risk
Reinvestment Risk
Inflation Risk
97
List all Types of UnSystematic Risk
Business Risk
Financial Risk
Credit (Default) Risk
98
Trust Company
The company that will Be the trustee for your trust for a fee
99
Difference Between
Political Risk
Regulatory Risk
Legislative Risk
Political Risk - Risk of Political Movements hurting your investments (doesnt have to be elected officials ie: political Insurection)
Regulatory Risk - Regulatory Agency Changes Regulations (not Laws) that hurts your investments
Legislative Risk - Laws change (not Regulations) that hurts your investments
100
High Water Mark
A Method in Life and Annuity Contracts that says the benefit (ie: annuitization or death benefit) amount will be determined by the highest account value the plan ever reached (even if since then the account took losses)
101
Are Yield and Return the same Thing?
YES!!!!
its what you get / what you payed for it
102
Yield / Return Formula (3 parts to the formula)
(Income payments + Realized Capital Gains) / What the security Cost
only REALIZED capital Gains not Unrealized
103
Mutual Fund Withdrawl Plan Types
(2 types)
Fixed Interval - Guarantees a certain amount of payments but not $ the amount of each payment
Fixed Payment - Guarantees a Certain $ amount for each payment but not amount of payments
104
When must the following be given to clients
IA Brochure
ADV Part 2A
ADV Part 2B
Federal:
- At or before you sign the contract (they sign to become a client)
State:
- at least 48 hours before signing a contract
OR
at the time of the contract being signed. AND the client must be able to
cancel it without a penalty within five days.
IA Brochure - About the RIA (the company)
ADV Part 2A - About the RIA (the company)
You need to give ONE of these -NOT BOTH- to the client
ADV Part 2B - About the IAR (the person)
105
IA Brochure
ADV Part 2A
ADV part 2B
When must they be reviewed
Annually
106
IA Brochure
ADV Part 2A
ADV part 2B
When Updated when does old forms need to be replaced with the newly updated forms
Immediately after updating
Only needs to be given to NEW clients not old ones
107
When must your Current Client Info Be reviewed and updated
either every 3 or 4 years (tutor wasn't sure on which one it is)
108
When is the IA Brochure not required to be given to a new client
if the client is an investment company
OR
if services offered are "impersonal" and costs less than $500/yr
109
IA Brochure
ADV Part 2A
ADV part 2B
What are these forms Penalty Free Withdrawl Period Rules?
FOR STATE LAW ONLY NOT FEDERAL
if
Brochure / ADV was given to client less than 48 hrs before signing:
they MUST be given the option to cancel it without a penalty within 5 days.
110
Stock Swap
Swapping one class of stock for another
ie: issuer swaps regular common stock for Class A Stock that has no voting rights to stop a hostile take over (known as the issuer taking a poison Pill)
111
Stock Classes
Different types of common stock issued by the same company that have different features
ie: Class A Stock with no voting rights
Always Common NEVER Preferred Stock
112
On The Test Are Mutual Funds
Open End
Closed End
or
Both
OPEN END ONLY
Different from the TERM INVESTMENT COMPANY
(investment company could mean open or closed end)
113
Block Trade
a Trade of at least 10,000 Shares
114
Allowed Amount of NON-Accredited investors in a Private Placement for
-USA
-SEC
-USA = up to 25
-SEC = up to 35
115
State Admin Abilities
What Actions can they take?
-Cease and Desist
-Censure
-Suspend
-Fine
-Subpoena
BUT ONLY A COURT CAN ENFORCE THOSE ORDERS (not the State Admin they are only a regulator)
116
IntraState Offerings are for registration in HOW MANY STATES
InterState Offerings are for registration in HOW MANY STATES
Only 1 state
they are exempt from SEC registration
More than 1 state
117
involuntary assignment
and
an example of one
When IA's ownership changes but they dont have to send Notice of Approval to their clients
Example:
If IA is a Partnership, not a corporation
118
When IA's Ownership changes...
When is it a
Assignment
or
Involuntary Assignment
Assignment IF
there is a MAJORITY change in ownership
and
IA is not a Partnership
119
Assignment
(When IA's Ownership changes)
It means the Investment Advisory Contracts have been ASSIGNED to a new Buyer
the Clients don't have to approve of the SALE
only approve of THE NEW OWNERS MANAGING THEIR MONEY
120
Are insurance Companies Exempt From registration?
YES and NO
Securities ISSUED by them are Exempt (ie: Stock Ownership in the Insurance Company)
Products SOLD by them are NOT EXEMPT (ie: Variable annuity sold to client by Insurance Company)
121
List All Persons that qualify as an Accredited Investor
-Person who makes 200k/yr
-Couple who makes 300k/yr
-Person who has 1 million in Equity Excluding Home
-Institutions
-Affiliates of the Underlying Issuer
122
Are the following Exempt Transactions or Not
-Selling Stock To Existing Shareholders with No Commission
-Executor of an estate selling securities for the estate
-Trustee of a trust selling securities for the trust
-Selling Stock To Existing Shareholders with No Commission - EXEMPT
-Executor of an estate selling securities for the estate - EXEMPT
-Trustee of a trust selling securities for the trust - NOT EXEMPT
123
Canada's Exempt Issuers Rules
Federal and State (Providence) are Exempt
also, Subdivisions of those 2 are also Exempt
This means that Localities are basically always exempt as well because they are always subdivisions of providence and Federal jurisdictions
124
S&P 400
what to remember
More likely Mid-CAP companies than S&P500
125
Market Capitalization Amounts For
Large Cap
Mid Cap
Small Cap
Large Cap: $10 Billion - $200 Billion in Market Capitilization
Mid Cap: $2 Billion - $10 Billion in Market Capitilization
Small Cap: $250 million - $2 Billion in Market Capitilization
126
What is Market Capitalization Mean
of Share's Outstanding * Share Price
(only outstanding shares not treasury shares)
127
Estate Tax Credit
the first $12.92 million (might be $11.4 million on the test)
of an inherited Estate is free from estate tax
(its more complicated than that but that's the basics)
128
What does the Following Mean
-Blue Chip
-White Chip
-Green Chip
-Purple Chip
-Blue Chip - Long Established Company
-White Chip - Poor Quality Company
-Green Chip - Environmental Company
-Purple Chip - Highest Level of Blue Chip Companies
129
Tomb Stone Ad
Basically Says
"This Security is Comin Soon, here's how to Find out more"
and that's it nothing more allowed
130
Definition of Prospectus
and Items that are not considered Prospectus
Communication Made in:
-Writing
-Radio
-TV
that offers a security for sale
Not Considered
-Oral
-TombStone Ad
131
Consent to Service of Process must be filed with Admin By
IA
IAR
BD
and sometimes (depends on the Admin)
Issuers
Trustee's
(lists are not all inclusive)
132
The Term "Isolated Transaction" means
It was a Private Placement
133
Do Stock Swaps result in Realized Capital Gains
Sometimes, it just depends upon what types of stocks are being swapped
134
what form do IAR's and Agents of BD use when registering
U4 form
135
If IA if Federally Registered who does IAR register with?
FINRA (basically the states not the SEC)
136
Are Hedge Funds the same thing as Private Funds
No
Private Funds are always exempt from federal registration
(if they dont meet the criteria they are then considered Investment companies and required to register)
Hedge Funds usually are exempt but are not always
137
Are ALL private funds exempt from registration?
YES
if they dont meet the criteria for exemption then they are considered Investment companies
138
Do Foreign Private Advisors have to register as an IA
NO
as long as they meet the exemption criteria
139
what is Order Flow?
what are its rules if you are doing it?
Setting Clients up with specific funds/ companies that you benefit on the back end from
Rules:
Must be disclosed to the customer on their
"Trade Confirmation"
140
Are Qualified Plan's good for receiving Income?
No it defeats the purpose.
they get tax deferral status and are better for leaving money in them to grow tax deferred instead of pulling money out where you will be taxed and might have penalties as well.
141
If BD Sponsers a WRAP Program:
-What must BD do
-What must Agents of BD do
BD - Register as an IA
Agent of BD - Register as IAR (ONLY IF THEY ARE SELLING THE WRAP PROGRAM TO THEIR CUSTOMERS)
Basically if anyone receives a fee (for managing funds) = register as IA/IAR
142
Are ETN's or UIT's Required to register under the Investment Company Act of 1940
ETN's - No (they register under Securities Act of 1933)
UIT's - Yes (they register under IC act but not regulated by it)
143
Difference Between
Required Rate of Return
and
Nominal Rate of Return
Required Rate of Return - The Expected Rate of Return
"This is the return we SHOULD be able to get"
Nominal Rate of Return - The Coupon Rate of Return (think Nominal Yield)
"This is the return we WILL give you"
144
What is a WRAP fee
A Bundle of Investment Programs managed by the sponsor
Charges a flat management fee that usually covers and BD commission's for transactions
ie:
this is our SAFE program
this is our GROWTH program
this is our INCOME program
145
When you pay taxes to foreign countries how does that work on your US tax return
Foreign Taxes Paid is a CREDIT to your US tax return
NOT A DEDUCTION!!!
(deductions are plugged into the equation before AGI is calculated
whereas Credits are plugged in AFTER AGI is calculated)
146
What Items of Balance Sheet are Contained within a companies
Capital Structure
-Issued Stock
-Issued Bonds
-Retained Earnings
NOT cash
think "What things does the company do to get the capital it needs?"
147
What is Statement of Cash Flows
how is it different from Income Statement
Report that deals with WORKING CAPITAL
(current assets and liabilities and the flow of cash)
It breaks down the Flow of Cash on a deeper level than the income statement
(specifies in greater detail where the cash came from, where it is and where it is going where as income statement might just label it as "accounts payable" or something generic like that)
148
AIR
Variable Annuities:
Assumed Interest Rate
for Annuitization:
basically says we will give you a minimum of ____% in the account per year (AIR)
your monthly payment will never go below that AIR but might go above it if the market does well
