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Financial Services

4.1 Products and Concepts

Knowledge of the products and concepts relating to the financial services industry, including financial instruments, financial management, insurance principles, and cash and capital principles.

Critical Work Functions

  • 4.1.1 Examine characteristics to distinguish between stocks, bonds, and commodities
  • 4.1.2 Examine characteristics to distinguish between insurance and annuity products
  • 4.1.3 Develop procedures to create a financial plan
  • 4.1.4 Analyze tax structures and consequences to assist in business decision-making
  • 4.1.5 Examine characteristics to explain underwriting functions
Technical Content Areas

  • 4.1.6 Financial Instruments
    • Understands the available financial instruments and risk associated with each instrument
    • Recognizes appropriate situations for each instrument
    • Understands basic differences and similarities between debt-based, equity based, and foreign exchange instruments; Recognizes appropriate investment opportunities associated with each instrument.
    • Financial instruments include:
      • Securities (Stocks, Bonds, T-bills)
      • Other cash (Loans, Certificates of Deposit)
      • Exchange traded derivatives (Futures, Options)
      • Over-the-counter derivatives (Swaps, Caps, Exotic Instruments)
  • 4.1.7 Financial Management
    • Demonstrates an awareness of the available analytical functions associated within the financial services industry
    • Understands the basic concepts associated with financial analysis, credit analysis, debt management, risk management, valuation strategies, investment profitability, and underwriting
  • 4.1.8 Insurance Principles
    • Understands the principles of insurance and insurance contracts
    • Demonstrates a knowledge of the different types of insurance (e.g., life, health, property, liability) and the associated risk covered by the insurance
  • 4.1.9 Cash and Capital Principles
    • Understands the nature of cash, the United States monetary system, and the time value of money
    • Recognizes the risk, return, and opportunity costs associated with capital