Course Details
Authors: Stephan R. Leimberg, J.D.; Michael P. Daly, CSOP, CFIRS, CCTP; Todd J. Mulligan, CFA, CFP®, CAIA
Stephan R. Leimberg, J.D.
The late Stephan R. Leimberg was the CEO of Leimberg and LeClair, Inc., an estate and financial planning software company, CEO of LISI, Leimberg Information Services, Inc., an email newsletter service, and President of Leimberg Associates, Inc., a publishing and software company. He was an Adjunct Professor in the Masters of Taxation Program of Villanova University School of Law and former adjunct at Temple University School of Law. He held a B.A. from Temple University, and a J.D. from Temple University School of Law. Leimberg was also the Editor of the American Society of Financial Service Professionals audio publication, Keeping Current. Leimberg was the author or co-author of numerous books on estate, financial, and employee benefit and retirement planning and a nationally known speaker. Leimberg was the creator and principal author of the entire Tools & Techniques series including The Tools & Techniques of Estate Planning, The Tools & Techniques of Financial Planning, The Tools & Techniques of Employee Benefit and Retirement Planning, The Tools & Techniques of Life Insurance Planning, The Tools & Techniques of Investment Planning, and The Tools & Techniques of Risk Management.
Michael P. Daly, CSOP, CFIRS, CCTP
Michael P. Daly is the San Francisco based Director of Risk Management and Operations for Pohl Consulting and Training, Inc. He is a high-energy professional with over 30 years of experience in the securities industry. He has an MBA in international business from the Thunderbird School of Global Management. Mike’s work in senior management roles in fiduciary risk management, administration and operations has given him a broad industry perspective. Today, Mike is focused on "paying it all forward". Mike works with Cannon Financial Institute, the Leimberg Library and other professional organizations to mentor the next generation of securities industry professionals. For over a decade, Mike served as Chair of the ICB/ABA Certification of Securities Operations Professionals. He served on the Board of Directors of the Fiduciary Investment Risk Management Association (FIRMA) for 8 years and has been a frequent contributor to the ABA’s Trust and Investment Magazine and the Journal of Financial Compliance. Mike’s path to the securities industry was not traditional. Mike began his career in the motion picture and television industry working at Paramount Studios in Hollywood. As the entertainment industry pivoted to the securities market to raise capital for entertainment products, Mike pivoted too. Beginning with the development and implementation of a securities lending business at a multinational regional bank on the west coast, Mike was soon taking on new projects and exploring the continuing evolution of finance through securities and securitization. Before long Mike expanded his knowledge and experience in various areas of fiduciary services, from retirement plan services to corporate trust. Along the way he has seen and has survived major market expansions, significant market collapse, regulatory change and market recovery. Mike is always curious, and his passions are diverse, from traveling the world to exploring new cultures, traditions, and recipes, to finding dusty bookshelves in pursuit of new knowledge. His most rewarding pursuit has been sharing this knowledge and personal experience about this amazing and rewarding industry.
Todd J. Mulligan, CFA, CFP®, CAIA
Todd J. Mulligan is a Certified Financial Planner™ Practitioner based in the greater Boston area. Day to day, Todd focuses on creating and implementing comprehensive financial plans and investment strategies for high net-worth individuals and families both in New England and throughout the United States. Over the years, Todd has earned numerous awards and accolades for financial planning, investment management, and client service from various financial publications. He holds the Certified Financial Planner™ and Chartered Financial Analyst designations, as well as the Chartered Alternative Investment Analyst designation. Since 2016, Todd has been creating and teaching Investment Planning courses for Boston University and its financial planning program. His coursework, which is focused on investment and risk management, as well as portfolio construction strategies, covers the topics required to sit for the CFP® Exam. In addition to teaching, Todd has served as a Content Editor and author for Wiley and Sons publishing company on various financial planning topics. Todd has also served in several volunteer roles for the CFA Institute and CFA Society of Boston, including roles on the Private Wealth Committee and the Mentor Committee. Todd was asked to serve as a volunteer content expert for the Global Private Wealth Management panel for the CFA Institute, helping to shape the future of Wealth Planning topics covered on future CFA exams. Todd lives in the Boston suburbs with his wife Jess and children Zach and Emilia. Todd graduated from Colgate University in 2006, where he also played Division 1 college football.
Publication/Revision Date: August 1, 2024
Course Exam Questions (online): 180 (multiple-choice)
Program Delivery Method: Self-Study
Available Formats of Course Text: Downloadable PDF, Printed/Mailed
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Intermediate | Familiarity with investing and technical analysis | None |
| CFP® | Intermediate | Familiarity with investing and technical analysis | None |
Sponsor ID Numbers
National Registry of CPE Sponsors I.D.: 107615
CFP Board Sponsor I.D.: 1008 — Course I.D.: 195510
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
Chapter 1: Introduction to Investment Planning
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand the eight steps involved in the investment planning process.
- Understand components of strategic asset allocation.
Chapter 2: Cash and Cash Equivalents
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what investments in “cash” are in terms of short-term debt instruments.
- Distinguish between a certificate of deposit and a money market fund.
- Recognize the short-term debt instruments that comprise a money market fund.
- Know the advantages and disadvantages of owning these types of instruments, to include any risk factor that may attach to their ownership in a broader portfolio.
- Understand the tax implications of short-term instruments and why some may offer higher yields.
Chapter 3: United States Government Securities
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Describe what U.S. Government Securities are and how they are issued.
- Distinguish between T-bills, notes, and bonds.
- Recognize the significant impact of TIPS and how they contrast with non-indexed Treasury issues.
- Know how these type issues may provide security in a portfolio and any unfavorable consequences of having invested in them.
- Recognize the various ways by which these securities may be purchased, including the “Treasury Direct” system of book-entry security purchase.
- List the items of information needed to replace a U.S. Savings Bond and what agency to contact.
Chapter 4: Corporate Bonds
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know the basic terminology surrounding the issuance, purchase, and sale of corporate bonds.
- Recognize the distinction between investment and non-investment grade bonds.
- Know why an investor might choose to invest or not invest in fixed-income investments.
- Calculate nominal “coupon” yield, current yield, and yield-to-maturity percentages, and how each is distinguished from the other.
Chapter 5: Convertible Securities
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize the derivative / option-like characteristics of convertible securities.
- Know how to calculate the payback period for recouping any premium paid.
- Know the advantages and disadvantages of investing in either a convertible security or a similar debt instrument with no convertible feature.
- Understand why corporations might desire to issue these hybrid securities as it pertains to funding requirements.
Chapter 6: Municipal Bonds
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Define the terminology of, and distinctions between different types of municipal bonds.
- Calculate the tax equivalent yield of a municipal bond issue.
- Understand the risk characteristics of this financial tool and when it might be appropriate for inclusion in a portfolio.
- Know how this product is priced and the fees attached in purchasing either individual issues or bonds that are part of a bond fund.
Chapter 7: Zero-Coupon Bonds
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know the major characteristics of zero-coupon bonds.
- Understand why these instruments might be preferable in a tax-deferred account.
- Understand how the prices of zeros react in a hostile environment of rising interest rates, and how this scenario can ultimately affect an investor’s portfolio.
- Describe what a Treasury Strip is, its basic characteristics, and how it might be utilized in an investment portfolio.
- Know the different types of federal government securities and the terminology used to distinguish them.
Chapter 8: Promissory Notes
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Define what a promissory note is and the circumstances under which this type of agreement might be utilized.
- Understand the risks inherent in using these IOUs.
- Know why certain “note” agreements can have imputed interest assigned to the lender, and how the AFR (applicable federal rate) may apply.
Chapter 9: Guaranteed Investment Contracts (GICs)
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between participating and nonparticipating GICs.
- Understand the risks inherent as well as the advantages of investing in GICs.
- Know how these investment contracts are issued and the acquisition costs associated with obtaining them.
Chapter 10: Common Stocks
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know the advantages and disadvantages of common stock ownership.
- Know why equities are usually highly marketable financial instruments.
- Discuss the tax ramifications of stock ownership and explain the effect that JGTRRA 2003 has had on stocks paying dividends to its shareholders.
- Understand when and why alternative financial instruments might be appropriate in an investment portfolio.
Chapter 11: Preferred Stock
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know the "cumulative" feature of a preferred stock as it relates to common stock issues of the company.
- State why a preferred stock is characterized as a "hybrid" instrument.
- Distinguish between the tax implications to two owners of preferred stock, one who is in the 25% tax bracket, the other in the 15% bracket.
Chapter 12: Stock Rights and Warrants
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between corporate warrants and stock rights.
- Know how to value a stock right.
- Understand the tax implications of exercising warrants and rights.
- Know what viable alternatives exist to these financial tools and when they might be utilized.
Chapter 13: Stock Options
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between a stock option's intrinsic value and time value.
- Recognize the different risks involved in the use of these derivatives, especially as it relates to a call option vs. a put option.
- Discuss the differences between stock options, stock purchase warrants, and stock rights.
- Determine what the cost basis of the shares purchased are, after a stock option has been exercised.
Chapter 14: Financial Futures
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify what the financial futures market includes, including its newest entry — the single stock futures contract.
- Know what the general objectives are for an investor selecting this financial tool.
- Know the volatile nature of financial futures and how their prices may be affected.
- Understand why these instruments are characterized as "executory contracts," and the tax implications resulting from their relation to the underlying asset(s).
Chapter 15: Commodity Futures
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between the terms "marked to market" and "daily price limit."
- Know when an investor may have his position "closed out."
- Know the maximum effective tax rate at which net gains of speculative commodity futures contracts are taxed.
- Understand the role played by both the producer of the commodity and the speculator who invests in a commodity futures contract.
Chapter 16: Mutual Funds
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know how most mutual funds "maintain a market" in their own shares.
- Understand what "fund supermarket" and "family of funds" are, and the impact they have on company sales.
- List some alternatives to direct investments in mutual funds.
- Know the key parts of a typical mutual fund worksheet (see Figure 16.1) and understand the importance of each element contained therein [acronym: P-R-E-T: PERFORMANCE / RISK / EXPENSES / TAXES].
Chapter 17: Exchange-Traded Funds (ETFs)
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Define what exchange-traded funds are and know how they may best be represented in a well-diversified investment portfolio.
- Know what "creation-units" are and how these financial tools may be traded.
- Understand the tax implication of ETFs qualifying as regulated investment companies.
- Understand what is meant by terms such as "tracking error" and "dead-weight" loss as it relates to expenses associated with ETFs.
Chapter 18: Hedge Funds
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what hedge funds are and their primary advantages and disadvantages as investment vehicles.
Chapter 19: Separately Managed Accounts (SMAs)
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what a Separately Managed Account (SMA) is and when it might be used.
- Recognize the benefits and drawbacks of investing in an SMA.
Chapter 20: Structured Products
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what structured products are, differentiating between their five basic categories.
- Recognize the advantages and disadvantages of investing in structured products.
Chapter 21: Life Insurance
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what a life insurance contract is and who are the parties involved.
- Know the different types of permanent insurance policies.
- Explain the advantages and disadvantages of different types of policies.
- Understand how life insurance policies are sometimes marketed as "investment" alternatives, and how this may impact upon a client's investment portfolio.
Chapter 22: Annuities
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify the basic terminology associated with a general discussion of annuities.
- Know the difference between a fixed and a variable annuity.
- Explain the tax treatment of annuities and how the "exclusion ratio" impacts this treatment.
- Understand the different annuity payout options and how each affects the distribution of assets.
Chapter 23: Real Estate
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know why an investor might choose real estate as a preferred investment to other natural assets.
- Understand the risks involved in direct investments in real estate.
- Distinguish among the different forms of ownership, both direct and indirect.
- Know what real estate "passive investments" are and how they affect personal liability concerns.
Chapter 24: REITs (Real Estate Investment Trusts)
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Know the risk/reward tradeoffs of investing in REITs.
- Understand what the considerations are for taxable investors.
- Discuss what the impact of joint ventures in different types of REITs is on real estate investing generally.
- Determine how best to select REIT investments when the goal is (a) income and (b) capital appreciation.
Chapter 25: Asset-Backed Securities
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Explain the similarities and differences between different types of mortgage-backed securities as they relate to: (a) payment streams, (b) guarantees, and liquidity concerns.
- Understand what a pass-through certificate is and how it "works."
- Know the impact interest rate movements have on the term to maturity of a mortgage-backed security.
- Locate sources having information about performance and availability for purchase of asset-backed securities.
Chapter 26: Oil and Gas
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Explain the tax advantages accruing to a successful investment in these nonfinancial assets.
- Know the concept of risk vs. return as it relates to investments in oil and gas assets.
- Understand the role of the sponsor participation and how it affects direct investments in nonfinancial assets.
Chapter 27: Precious Metal Investments
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Explain some of the reasons why a risk-seeking investor might want to invest a portion of his assets in precious metals.
- Understand basic terminology used in a discussion of tangible assets, such as (a) assay, (b) numismatic, (c) ingots, and (d) bullion.
Chapter 28: Investing in Collectibles
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Explain how supply and demand factors into the ability to access certain collectibles.
- Understand the rationale behind why some collectibles increase in value.
Chapter 29: Limited Partnerships
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Define what a limited partnership is, and the different forms it may take.
- Understand how liability concerns might attract an individual to invest in a limited partnership.
- Discuss liquidity, marketability, and suitability concerns as they relate to investments in a limited partnership.
- Understand the distinction between limited partnerships being taxed either as corporations or partnerships.
Chapter 30: Private Placements and Venture Capital
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between private placements and publicly traded stock.
- Distinguish between the terms (a) a private placement and (b) venture capital.
- Explain what the nature of a venture capital partnership is and how it is funded.
- Recognize the implications for both investment risk and liquidity risk when investing in a private placement.
Chapter 31: American Depositary Receipts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Explain what an ADR is, and how it trades.
- Understand the tax implications of investing in ADRs, and what affect both U.S. and foreign country tax regulations have upon their sale.
- Become familiar with terminology associated with ADRs, such as (a) GDRs and EDRs, and (b) "qualified foreign corporation."
Chapter 32: Investment Risk
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Define the term "investment risk."
- Distinguish between systematic and unsystematic risk.
Chapter 33: Measuring Investment Risk
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand the meaning of "risk" and its impact on an investment portfolio.
- Know the key terminology associated with the measurement of investment risk.
- Interpret what different statistical measurements of risk mean in relation to their impact on a portfolio.
- Understand the difference between symmetrical and asymmetrical distributions and how each might influence individual security and portfolio analysis.
Chapter 34: Time Value Concepts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Evaluate alternative investment strategies utilizing time value of money concepts.
- Identify key terminology associated with time value concepts.
- Explain how tangible benefits of an investment must be considered in any complete discussion involving time value analysis.
- Calculate all PV, Interest, PV, PMT, and FV solutions to either annuity due or ordinary annuity type problems.
Chapter 35: Measuring Investment Return
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify the rate of return concepts and how financial professionals utilize these measurement devices.
- Distinguish between simple vs. compound rates of return and between time-weighted and dollar-weighted returns.
- Describe some of the shortcomings of the IRR Method.
- Define what is "pay-back period analysis" and its usefulness when comparing alternative investments.
Chapter 36: Fixed-Income Valuation Concepts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand how the current price of bonds affects their yields.
- Know the key terminology associated with fixed-income investments.
- Identify when convexity, as a measure of bond price sensitivity to interest rates, can be a better "indicator" than modified duration.
- Determine when a bond may be selling at either a discount or premium.
Chapter 37: Equity Securities Valuation Concepts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand how each method of valuation discussed in this chapter is calculated for a security's intrinsic value.
- Distinguish between equity valuations derived from (a) the constant growth model and (b) the multiple growth rate model.
- Distinguish among the different ratio analysis formulas discussed in the Market Based Method section and how they may be related.
Chapter 38: Asset Pricing Models
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand the underlying relationship between required rates of return and portfolio theory.
- Distinguish between the capital market line and the security market line.
- Make comparisons among different asset pricing models and the limitations that each may possess in attempting to assess expected returns.
Chapter 39: Portfolio Management and Measurement
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Recognize the six main steps in the financial planning process, and the three main phases in a client lifecycle analysis.
- Distinguish between different risk-adjusted measurements of risk.
- Distinguish between time-weighted returns and dollar-weighted returns when evaluating a client's portfolio.
- Understand the importance of the investment policy statement in relation to developing a well-rounded financial plan for a client.
Chapter 40: Asset Allocation and Portfolio Construction
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Differentiate between theoretical and practical considerations relating to the "market portfolio."
- Identify basic terminology associated with asset allocation and modern portfolio theory.
- Describe what is meant by "market efficiency" and its implications for the trading of and investing in securities.
Chapter 41: Investment Strategies
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish between fundamental analysis and technical analysis in active security selection.
- Be familiar with the terms used when discussing the main elements described in a company balance sheet.
- Identify key company ratios used to evaluate a firm's financial performance as contrasted with similar companies in the same industry.
- Understand the advantages and disadvantages of market timing vs. a buy and hold investment strategy.
Chapter 42: Portfolio Management Concepts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify key terminology associated with formula investing and the common terms associated with investment strategies for both equity and fixed-income assets.
- Calculate the average cost per share (DCA) and price per share (Share Averaging) for periodic investments in a typical mutual fund.
- Be familiar with the formula investing strategies for both equity and fixed-income assets.
Chapter 43: Hedging and Option Strategies
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Identify key terminology associated with the use of hedging and option strategies, and understand the fundamental nature of hedging and other option strategies.
- Explain when the use of such financial instruments may help reduce risk in an investment portfolio.
- Understand the fundamental nature of hedging and other option strategies.
- Distinguish between stop-loss orders and short sales.
- Understand the fundamental characteristics of the derivative markets.
- Explain how the use of "synthetic" securities may improve upon the efficiency and reliability of hedging "tools."
Chapter 44: Leveraging Investment Assets
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Distinguish among the three types of "leverage" techniques employed in an investment portfolio.
- Know when the use of leverage is appropriate for an investment portfolio, and the risks associated with it.
- Understand the ramifications of utilizing "reverse leverage" in the purchase of an investment.
- Describe the risk associated when there is only a 2% "spread" between the cost of borrowing and an investment's expected return.
Chapter 45: Taxation of Investment Vehicles
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Illustrate how property acquired by gift is recognized by the Internal Revenue Service.
- Explain the significance of timing of reporting gains or losses upon sale of an individual asset.
- Explain how the tax law defines income and some of the common items included in the definition.
- Differentiate between allowed and disallowed interest as it relates to deductibility.
- Define the "economic benefit theory" as it relates to the employee benefit of group term life insurance.
- Identify the tax preferences that must be added back when computing alternative-minimum-taxable income (AMTI).
Chapter 46: Tax-Efficient Investment Strategies
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Calculate the tax equivalent yields on taxable and nontaxable bonds.
- Explain how the recognition of either a gain or loss can be controlled through the concepts of deferral or acceleration.
Chapter 47: Investment Strategies for Tax-Advantaged Accounts
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Apply time value concepts and formulas as they relate to investment strategies for tax-deferred accounts.
- Evaluate and compare tax rules relating to traditional IRAs and Roth IRAs.
- Measure the effects of tax leverage when comparing alternative investments.
- Explain how gains on net unrealized appreciation (NUA) on employer security distributions is treated.
Chapter 48: The Net Investment Income Tax
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Understand what types of income are subject to the Additional Medicare Surtax and the NIIT.
- Understand how to calculate Medicare surtax and NIIT liability.
- Understand the role of above-the-line and below-the-line deductions in calculating NIIT liability.
- Understand how various business transactions can create Medicare surtax and NIIT liabilities.
