keep hope alive
Explain methods used to analyze capital investments
(e.g., payback period- the length of time required for an investment to recover its initial outlay in terms of profits or savings. discounted breakeven- A discounted payback period gives the number of years it takes to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing the time value of money. net present value-the value in the present of a sum of money, in contrast to some future value it will have when it has been invested at compound interest. internal rate of return- Internal rate of return (IRR) is a metric used in capital budgeting measuring the profitability of potential investments. Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero. IRR calculations rely on the same formula as NPV does.
Discuss the financial planning process (SP)
- Establishing and defining the client-planner relationship - Gathering client data and determining goals and expectations - Analyzing and evaluating the client's financial status - . Depending on the services requested, this assessment could include analyzing the client's assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. - Developing and presenting the financial planning recommendations and/or alternatives. -Implementing the financial planning recommendations The financial planner and client agree on how recommendations will be carried out. coordinating the process with the client and other professionals such as attorneys or stockbrokers. - Monitoring the financial planning recommendations - Report to the client periodically to review the situation and adjust recommendations as needed.
Nature of budget
-Forecast of a company's income and expenses for a specific amount of time. - Allows entity to evaluate how to use funds in fixed/discretionary categories. -Avoid debt - Provides focus for financial goals.
Explain the role of finance in business (CS)
-Help capital move from investors to business . -Businesses need finance to assist with operations, -Possible with financial markets and investment vehicles. (including loans/ short and long term financing) - Also includes roles in business development and corporate governance.
Describe components of a payment system (FI:733) (SP)
-Standard methods of transmitting payment messages between members -Agreed means of settling claims within the members/participants (normally through the deposits of the members/participants with the central bank) -Common operating procedures and rules (admission, fees, operating hours)
Describe the role of financial Institutions.
-conducts transactions: loans, deposits, investments. Investment Banks Face Amount Certificates Investment Companies Commercial Banks Loans/Credit Unions Insurance Companies Management Investment Companies Brokerages -Purpose : Interact with consumers to help them achieve financial goals
Explain the need to save and invest.
-helps create wealth needed to achieve financial goals - protect business from emergency -reduce need for debt - provide long-term stability
Identify the factors that impact governance structures (PD:302) (SP)
-interests of a company's many stakeholders -needs of the company -legal considerations(need a board of directors) -future plans/current internal controls
Discuss types of investment objectives (SP) Discuss the nature of investment risk (SP) Describe the nature of diversification strategies (SP)
1. preserve the capital and receive regular income 2. dont know how market will go/how companies will do 3. safe-net if a company fails/if one investment fails
Explain the nature of balance sheets
A balance sheet is a financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders. ALOE
Explain the role of capital markets in business finance (SP)
A capital market is a financial market in which long-term debt or equity-backed securities are bought and sold. Capital markets are defined as markets in which money is provided for periods longer than a year.
Explain the use of cash budgets (FI:505) (SP)
A cash budget is an estimation of the cash inflows and outflows for a business over a specific period of time, and this budget is used to assess whether the entity has sufficient cash to operate.
Discuss the nature of corporate bonds (FI:523) (SP)
A corporate bond is a corporation's written pledge to repay a specific amount of money, plus interest.
Describe the scope of costs in managerial accounting (e.g., direct cost, indirect cost, sunk cost, differential cost, etc.) (SP)
A direct cost is a price that can be completely attributed to the production of specific goods or services. Some costs, such as depreciation or administrative expenses, are more difficult to assign to a specific product and therefore are considered to be indirect costs. Indirect costs are costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). Indirect costs may be either fixed or variable. Indirect costs include administration, personnel and security costs. In economics and business decision-making, a sunk cost is a cost that has already been incurred and cannot be recovered. Sunk costs (also known as retrospective costs) are sometimes contrasted with prospective costs, which are future costs that may be incurred or changed if an action is taken. Differential cost is the difference between the cost of two alternative decisions, or of a change in output levels. The concept is used when there are multiple possible options to pursue, and a choice must be made to select one option and drop the others.
Explain the nature of dividend reinvestment plans (DRIPs) (SP)
A dividend reinvestment program or dividend reinvestment plan (DRIP) is an equity investment option offered directly from the underlying company. The investor does not receive quarterly dividends directly as cash; instead, the investor's dividends are directly reinvested in the underlying equity.
Explain the nature of hostile takeovers (SP)
A hostile takeover is the acquisition of one company (called the target company) by another (called the acquirer) that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved.
Mutual fund prospectus
A mutual fund prospectus is a document detailing the investment objectives and strategies of a particular fund or group of funds, as well as the finer points of the fund's past performance, managers and financial information. You can obtain these documents directly from fund companies through mail, email or phone.
pro forma statement
A pro forma financial statement is one based on certain assumptions and projections. For example, a corporation might want to see the effects of three different financing options. Therefore, it prepares projected balance sheets, income statements, and statements of cash flows. External forces- economy, finance, weather, infrastructure, laws, trends, customer base
Discuss the use of variance analysis in managerial accounting (FI:661) (SP)
A variance is the difference between a budgeted amount and an actual amount. Business managers often conduct variance analysis to determine if their businesses have spent or received more or less money than was budgeted. If there is a discrepancy between what was budgeted and what was actually spent or received, then managers can investigate the causes of the variance and handle the situation as necessary.
Explain the purpose of internal accounting controls (SP)
Accounting controls are the methods and procedures a company uses to ensure the accuracy and validity of their financial statements. They do not ensure law and regulatory compliance, but they are designed to help your company comply. The internal controls protect you from abuse and fraud, and make sure all information is received in an accurate and timely manner.
Annual report
An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company's activities and financial performance. They may be considered as grey literature.
Describe the nature of income statements
An income statement is a financial statement that reports a company's financial performance over a specific accounting period. ... It also shows the net profit or loss incurred over a specific accounting period.
Explain possible advancement patterns for jobs.
Associates can be promoted to managers who can be promoted to senior managers who can be promoted to vice presidents who can be promoted to C-level positions.
Identify skills needed to enhance career progression (PD:035) (SP)
Attending seminars and participating in leadership development conferences can allow employees to contribute to their own professional development.
Describe the components of a well-governed company (e.g., board of directors, reporting, transparency, internal and external audit functions) (PD:214) (SP)
BoD-Directors are elected by shareholders or appointed by other board members, and they represent shareholders of the company. The board is tasked with making important decisions, such as corporate officer appointments, executive compensation and dividend policy. reporting- set system in place w/ standards transparency- not hiding vital information from shareholders internal audit- important to be ethical w/ internal audit functions which check company accounting statements external audit- using professional auditors/well-rated auditors
Discuss the importance of corporate governance in business (PD:213) (CS)
Corporate governance broadly refers to the mechanisms, relations, and processes by which a corporation is controlled and is directed; involves balancing the many interests of the stakeholders of a corporation. important in identifying ownership of a corp and the interests of the stakeholders/target audience important b/c it dictates a how a corp is run
analysis used in making investment decisions
Bottom-up investment analysis entails analyzing individual stocks for their merits, such as valuation, management competence, pricing power and other unique characteristics of the stock and company. Bottom-up investment analysis does not focus on economic cycles or market cycles firsthand for capital allocation decisions but instead aims to find the best companies and stocks regardless of economic, market or particular industry macro trends. In essence, bottom-up investing takes more of a microeconomic approach to investing rather than a macroeconomic one, which is a hallmark of top-down investment analysis. op-down investment analysis emphasizes economic, market and industrial trends before making a more granular investment decision to allocate capital to specific companies. An example of a top-down approach is an investor evaluating industries and finding that financials will likely perform better than industrials; as a result, the investor decides his investment portfolio will be overweight financials and underweight industrials.
Explain the nature of capital investment (SP)
Capital investment refers to funds invested in a firm or enterprise for the purpose of furthering its business objectives.
Identify sources of career information (PD:022) (CS)
Career information can be found on the Internet or at a local career fair.
Explain career opportunities in entrepreneurship.
Career opportunities in entrepreneurship include starting/running a restaurant, inn, travel agency, medical firm, accounting firm, etc.
Explain forms of dividends (SP)
Cash dividend. The cash dividend is by far the most common of the dividend types used. ... Stock dividend. A stock dividend is the issuance by a company of its common stock to its common shareholders without any consideration. ... Property dividend. ... Scrip dividend. ... Liquidating dividend.
cash flow
Cash flow is the movement of money in and out of your business. The process includes: Inflow which comes from operations such as the sale of goods and services, loans, lines of credit, and asset sales. Outflow which occurs during operations such as business expenditures, loan payments, and business purchases. A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing -
Describe cash management procedures (FI:739) (SP)
Cash management refers to a broad area of finance involving the collection, handling, and usage of cash. It involves assessing market liquidity, cash flow, and investments. collection, reconciliation, investment(stocks, bonds, mutual funds), reserve requirement, bank vaults(security)
Explain the role of managerial accounting techniques in business management (FI:660) (SP)
Continually assess how an organization stacks up against the competition, with an eye toward continuously improving. -important for improving management techniques
Determine the components of internal accounting control procedures for a business (SP)
Controls- the organizational structure and culture created by management and employees to sustain organizational support for effective internal control Risks- "Risk assessment...involves identification and analysis of the risks of material financial misstatement," In a small business, risk assessment is often efficient since the management or owner has in-depth knowledge of the company's workings and therefore knows where the risks are greatest. The main focus is on operations and compliance risks, but risk assessment also considers human error, including improperly entered transactions, lost transactions and transactions on the books that simply didn't occur. Systems- Information systems identify, capture, process and distribute information supporting the achievement of financial reporting objectives Monitoring- All internal control systems need to be monitored to assess quality in the system's performance. This is usually managed through a combination of evaluations and ongoing monitoring activities. Procedures- Control procedures are all the methods for implementing environmental controls, risk assessment, monitoring and information communication. Control procedures help to train your personnel so that everyone works the same way. Ratcliffe reports, "Control activities are the policies and procedures that help ensure management directives are carries out."
Discuss the nature of cost allocation (SP)
Cost allocation is the assigning of a common cost to several cost objects. For example, a company might allocate or assign the cost of an expensive computer system to the three main areas of the company that use the system. A company with only one electric meter might allocate the electricity bill to several departments in the company.
Discuss the nature of depreciation (SP)
Depreciation is a portion of a fixed asset's cost which is expired or consumed during an accounting period. An estimated period of time (usually more then one year) during which a fixed asset is used and depreciated by an entity or a business.
Explain forms of financial exchange (cash, credit, debit, electronic funds transfer, etc.) (PQ)
Electronic funds transfer (EFT) is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff.
Explain legal considerations for finance (SP)
Embezzlement charges can be very extensive. Follow FTC guidelines and other regulatory procedure
Explain employment opportunities in business.
Employment opportunities in business includes marketing, accounting, market research, sales, finance operations, business operations, human resource management, etc. in the fields of technology, hospitality, tourism, sports/entertainment etc. accountant, financial manager, MBA, etc.
Debt/Equity FInancing
Equity financing often means issuing additional shares of common stock to an investor. With more shares of common stock issued and outstanding, the previous stockholders' percentage of ownership decreases. Debt financing means borrowing money and not giving up ownership.
Describe the impact of governance processes on decision-making and management functions
Governance refers specifically to the set of rules, controls, policies and resolutions put in place to dictate corporate behavior
Discuss the nature of cost accounting budgets (FI:662) (SP)
In cost accounting, a budget is a financial plan that includes both financial and non-financial information. Its most obvious features are a projection of revenue (how much you anticipate selling) and expenses (how much you anticipate spending).
Company value
In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long run.
Explain the need for innovation skills (PD:126) (CS)
Innovation and creativity is necessary in any employee as pivotal ideas can lead to major breakthroughs in a company's financial success.
Marginal Analysis
Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits.
Explain types of financial markets (e.g., money market, capital market, insurance market, commodities markets, etc.) (SP)
Money market-financial instruments with high liquidity and very short maturities are traded; consist of documents cash/spot market- goods are sold for cash and are delivered immediately capital market- one in which individuals and institutions trade financial securities primary market-where investors have their first chance to participate in a new security issuance secondary market-where investors purchase securities or assets from other investors, rather than from issuing companies themselves interbank market- the financial system and trading of currencies among banks and financial institutions, excluding retail investors and smaller trading parties Insurance- the insurance market is simply the "buying and selling of insurance Commodities- A commodity market is a market that trades in primary economic sector rather than manufactured products.
Explain the use of technology in accounting (FI:352) (SP)
Most businesses use some type of accounting software to record and report their business transactions. Even when using an automated system, you still need to collect and keep your source documents and each business transaction must be separated into its debit and credit parts. Computerized posting to accounts is faster and eliminates accounting errors that a person might make doing it manually. Daily, weekly, monthly, and annual reports can be generated quickly and accurately. Software is also available for tax collection and reporting.
Explain the nature of financial needs (e.g., college, retirement, wills, insurance, etc.) (CS)
Needs that are essential for daily life, both short term and in the future
Explain the need for ongoing education as a worker.
Ongoing education (such as receiving an MBA) is necessary to continue to obtain skills necessary in a constantly developing 21st-century business environment.
Describe sources of securities information (CS)
Public companies make information available through a variety of documents. Annual reports highlight the company's performance and changes over the past year. A 10-K report is filed annually with the Securities and Exchange Commission. Companies often provide quarterly reports to shareholders, as well Other sources of information include newspapers, magazines, and other periodicals. The Wall Street Journal is one of the most respected sources of financial information, as are Investor's Business Daily, The New York Times, Barron's, Business Week, Forbes, and Fortune. Other publications are specific to investment advisory information, such as Moody's, Value Line Investment Survey, and Standard and Poor's Stock Guide. Securities brokerages also have numerous resources and internal reports for securities advice and information. Finally, there are numerous web sites, as well as television and radio programs offering assistance.
Differentiate among management accounting responsibility centers (i.e., cost, profit, investment, revenue) (SP)
Revenue centers usually have authority over sales only and have very little control over costs. To evaluate a revenue center's performance, look only at its revenues and ignore everything else. Cost centers usually produce goods or provide services to other parts of the company. Because they only make goods or services, they have no control over sales prices and therefore can be evaluated based only on their total costs. Profit centers are businesses within a larger business, such as the individual stores that make up a mall, whose managers enjoy control over their own revenues and expenses. They often select the merchandise to buy and sell, and they have the power to set their own prices. You could call investment centers the luxury cars of responsibility centers because they feature everything. Managers of investment centers have authority over — and are held responsible for — revenues, expenses, and investments made in their centers. Return on investment (ROI) is often used to evaluate their performance.
Intrepret Security tables
Securities tables utilize abbreviations in order to save space. Company names are shortened to one-to-four ticker symbols. Other abbreviations include: • Div (current dollar amount of the annual dividend per share) • Yld% (dividend of the stock as a percentage of stock price) • PE (price-earnings ratio), Vol 100s (trading volume in hundreds of shares) • Hi (highest price sold for that day) • Lo (lowest price sold for that day) • Close or Last (price per share at end of the trading day) • Net Chg (among the closing price moved up or down from the previous day) Securities are listed alphabetically. The high and low price for stocks during the past 52 weeks may also be listed. Overall market performance is listed with the Dow Jones Industrial Average, Standard & Poor's 500, the NYSE Index, the NASDAQ Performance Index, and the AMEX Index.
Discuss the nature of short-term (operating) financial plans (SP)
Short term finance, often referred to as bridging finance, usually refers to loans mostly offered on terms of up to 12 months. 3) interest is usually included in the facility so the borrower does not make interest payments during the term.
Describe the nature of short-term financial management (FI:513) (SP)
Short term financial management refers to managing current assets and current liabilities of the firm.
Identify skills needed to enhance career progression.
Since the corporate ladder is very competitive, employees should possess strong negotiation skills, conflict management skills, emotional intelligence, and related skills to enhance career progression. -communication skills
Explain the nature of statements of changes in equity (SP)
Statement of Changes in Equity, often referred to as Statement of Retained Earnings in U.S. GAAP, details the change in owners' equity over an accounting period by presenting the movement in reserves comprising the shareholders' equity. Movement in shareholders' equity over an accounting period comprises the following elements: Net profit or loss during the accounting period attributable to shareholders Increase or decrease in share capital reserves Dividend payments to shareholders Gains and losses recognized directly in equity Effect of changes in accounting policies Effect of correction of prior period error
Identify tentative occupational interest.
Tentative occupational interest is an individual's perception of a favorable career that is set to change.
Calculate real-estate-related values (e.g., capitalization rate, gross rental multiplier, rate of return, etc.) (SP)
The capitalization rate, often just called the cap rate, is the ratio of Net Operating Income (NOI) to property asset value. So, for example, if a property was listed for $1,000,000 and generated an NOI of $100,000, then the cap rate would be $100,000/$1,000,000, or 10%. Gross rent multiplier is the ratio between a rental property's gross scheduled income and its market value. In other words, a GRM of "X" is the same as saying that the property value is "X times" its annual gross income. A rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment's cost. Gains on investments are defined as income received plus any capital gains realized on the sale of the investment.
Discuss the nature of Initial Public Offerings (SP)
The first sale of stock by a private company to the public.
Discuss the nature of convergence/consolidation in the finance industry (SP)
The movement of a futures price towards the price of the underlying security or commodity as the contract nears its expiry date
Calculate the time value of money (SP)
The time value of money (TVM) is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.
Describe sources of income (wages/salaries, interest, rent, dividends, transfer payments, etc.)
Transfer payments- money paid by government to citizens (social security, unemployment, welfare, disability)
Discuss the role of ethics in finance (SP)
When managing large amounts of money, things can be easily stolen or not accounted for.
Describe techniques for obtaining work experience.
Work experience can be obtained through internship or entrepreneurship.
Explain the rights of workers (PD:021) (PQ)
Workers are guaranteed the right to reasonable pay/benefits and safe working conditions under U.S. federal law.
Discuss the nature of stock options (SP)
a benefit in the form of an option given by a company to an employee to buy stock in the company at a discount or at a stated fixed price.
Discuss the nature of cost accounting budgets (SP)
a budget is a financial plan that includes both financial and non-financial information. Its most obvious features are a projection of revenue (how much you anticipate selling) and expenses (how much you anticipate spending). The budget can also contain non-financial information, such as how many employees you think you need.
Protect against identity theft (CS)
digital security (passwords, phishing), don't carry around SIN, shred paper records, contact authorities
Explain the nature of tax liabilities (PQ)
amount of tax that an entity is obligated to pay due to taxable event (e.g. income, sale) legal claim on assets - may foreclose (seize/sell property) or impose lien
Discuss the issuance of stock from a corporation (FI:526) (SP)
equity financing - Companies issue common stock to raise money to start up their business and then to help pay for its ongoing activities
Compute key banking calculations (e.g., interest, annual percentage rate, exchange rates, etc.)
annual percentage rate- Divide the finance charge by the loan amount. Multiply the result by 365. Divide the result by the term of the loan. Multiply the result by 100. -APR allows you to evaluate the cost of the loan in terms of a percentage. exchange rate-given data
Identify types of currency (paper money, coins, banknotes, government bonds, treasury notes,
banknote govt bonds- govt takes money w/ intrest Treasury note- a note issued by the US Treasury for use as currency.
Explain the purposes and importance of credit (CS)
borrow money for another time i.e. mortgage can make bigger/better payments
Discuss employment opportunities in the finance industry (PD:152) (CS)
broker, accountant, financial manager, hedge fund manager, actuary
Discuss the cost of common stock (FI:528) (SP)
common stock-entitles the owner to vote at shareholders' meetings and to receive dividends loss of ownership of company(partial) and must pay dividends in exchange for more money through investment
Describe the concept of insurance (CS)
contract providing financial protection against specified loss o some risk facing individual/organization transferred to others o risks pooled/shared among large group of individuals o risk for any one individual/business reduced by controlling uncertainty of loss
Explain the nature of managerial cost accounting (e.g., activities, costs, cost drivers, etc.) (SP)
cost control to determine selling prices preparation of requisite financial statements, an area otherwise reserved for financial accounting.
Demonstrate the wise use of credit (CS)
costs of credit: annual fees, cash advances, late fee, interest on overdue; overdraft protection C's of credit: character, capacity, capital - credit score/report; small purchases Truth in Lending Act; Equal Credit Opportunity Act; Fair Credit Reporting Act CARD Credit Accountability Responsibility and Disclosure Act, 2009
technical analysis
financial analysis that uses patterns in market data to identify trends and make predictions.
Explain legal responsibilities associated with financial exchanges (CS)
financial capacity to pay; rules and regulations to govern acceptable conduct in securities exchanges
Describe the relationship between economic conditions and financial markets (SP)
financial markets help to efficiently direct the flow of savings and investment in the economy in ways that facilitate the accumulation of capital and the production of goods and services
Explain the nature and scope of financial globalization (SP)
global linkages through cross-border financial flows; has become increasingly relevant for emerging markets as they integrate financially with the rest of the world
Explain the time value of money (CS)
idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity
Describe components of a collection system (FI:734) (SP)
idk can't find anything see above
Explain the concept of accounting (CS)
information system for an information about an organization's economic activities o identifies, measures, records, communicates (accounting cycle) o information must be understandable, relevant, reliable, comparable (characteristics)
Discuss opportunities for building professional relationships in finance (PD:153) (SP)
internships, long tenure, through professional agencies, business cards, effective communication
Financial Service Providers
investment advisors: advice about securities; brokers: buy and sell securities financial planners: comprehensive financial plans
Maintain financial records (PQ)
keep up to date, organization is key, keep msot recent at hand, file old
Discuss the cost of corporate bonds (FI:524) (SP)
lose money(liability) b/c they are forced to pay interest on the loan in exchange for obtaining the money now
Describe functions of money (medium of exchange, unit of measure, store of value) (PQ)
medium of exchange: item widely accepted in exchange for goods and services in market unit of measure: system of units by means of which a quantity is accounted for and expressed store of value: tradeable commodity, currency, or capital; can be stored for future use
Describe the need for financial information
monitor and report on financial position of company - objective basis for decision making finance: management of money and process of acquiring needed funds
Analyze the impact of accounts payable schedules on working capital (FI:633) (SP)
need to make sure that there is enough money/cash flow to operate and be able to pay back loans -defaulting in a loan that you can't pay due to low capital is bad
Explain key ratios/terms in banking (SP)
net intrest margin - % of the average loans outstanding over the period cost to income ratio bad debts- arise when dudes can't pay off payments Tier 1 capital ratio- A: Tier 1 capital, under the Basel Accord, measures a bank's core capital. The tier 1 capital ratio measures a bank's financial health, its core capital relative and its total risk-weighted assets. In 2015, under Basel III, the minimum tier 1 capital ratio is 6%. Pricing measures(i.e. return on equity)
Discuss the nature of retirement planning
prepare 401k -employer matches what is taken out of paycheck -planning for pension funds social security healthcare-medicare/medicade make sure all costs related w/ kids are absolved some companies have benefits for retirees outside of saving -some may offer paid healthcare or cheaper products
Calculate stock-related values (e.g., the value of a constant growth stock, the expected value of future dividends, the expected rate of return, etc.) (SP) Calculate bond-related values (e.g., the price of a bond given its yield to maturity, the coupon interest payment for a bond, the effects of interest rates on the price of a bond, etc.) (SP)
price of stock= (estimated dividends for next period)/(required rate of return-growth rate) If a bond's coupon rate is equal to its YTM, then the bond is selling at par. Formula for yield to maturity: Yield to maturity(YTM) = [(Face value/Bond price)1/Time period]-1. intrest rates up= bond down intrest= bond value up
Explain the need for accounting standards (GAAP) (CS)
principles that standardize accounting practices - guidelines for financial accounting ensure accurate accounting for audiences - regulate industry; define ethical expectations business entity, matching, revenue recognition, cost, prudence, consistency, full disclosure, going concern, timeliness, materiality, monetary
Explain types of investments (CS)
security: tradeable asset of any kind bonds: fixed-income securities (contract), founded on debt (lending investment) low risk, low return stocks/equities: ownership of business (voting rights); can receive profits allocated to owners (dividends); volatile and not guaranteed, but high potential for returns mutual funds: collections of stocks and bonds by pooling money with investors (with strategy) o hedge funds: aggressively managed portfolio with advanced strategies to generate high returns derivatives: security with price derived from 'underlying assets' - contractual dates, values, definitions o for speculative purposes; hedging risk - other examples: futures contracts; swaps o options: contract giving buyer right to buy or sell asset at specific price on/before date (private investment partnerships, open to limited investors, high initial investment, illiquid)) not obligation to buy/sell; loss of investment (option price)
Discuss considerations in selecting a financial-services provider (CS)
services offered; fee structure; experience; advising style; performance measurements; references
Explain the nature of estate planning (FI:572) (CS)*
the collection of preparation tasks that serve to manage an individual's asset base in the event of their incapacitation or death, including the bequest of assets to heirs and the settlement of estate taxes. An estate plan begins with a will or living trust. A will provides your instructions, but it does not avoid probate. Any assets titled in your name or directed by your will must go through your state's probate process before they can be distributed to your heirs.
