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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