About This Chapter
Analyzing Customer Investment Profiles - Chapter Summary
With the help of this chapter on analyzing customer investment profiles, you'll review how financial and/or personal factors can be used to assess investment profiles and how customer-specific factors impact investment choices. You'll look at definitions and formulas for both alpha and beta in finance. Additionally, by the end of this chapter you'll be able to:
- Understand and identify investment objectives
- Explain FINRA rule 2111
- Talk about SEC regulations in regard to tender offers
- Define CBOE Rule 9.9
- Discuss how to verify investor accreditation and sophistication
- Apply investment portfolio analysis to product selection
- Describe the formula and advantages of Capital Asset Pricing Model
- Provide investment strategies and recommendations to hold
The wealth of information contained in this chapter is presented in a concise manner that lets you quickly review for your exam. Use as little or as much of the information as you find necessary. You can skim pertinent definitions by looking for the keywords in bold font.
1. Building Customer Investment Profiles: Strategies & Importance
This lesson will explore the steps in building a customer investment profile. You'll learn about the regulatory standards that guide the practitioner. The lesson will also identify the obligations each financial professional must satisfy.
2. Using Financial Factors to Assess Investment Profiles
The first step of any successful financial plan is an accurate investment profile. Investors often have current assets and liabilities and face specific tax situations. This lesson covers the five factors critical to developing an investment profile.
3. Using Personal Factors to Assess Investment Profiles
In this lesson, you will learn the important information regarding personal factors to gather from clients in order to assess their investment profiles and meet the relevant regulations.
4. Understanding & Identifying Investment Objectives
Imagine that you graduated from college, started a great job, and at 25 years old were ready to ride out the inevitable ups and downs of the stock market. Now you are 55 and far more aware of the reality of eventual retirement and asking yourself if you could afford another recession like the one in 2008. You are not alone. In this lesson, we will examine different investment objectives we face as we navigate life.
5. How Customer-Specific Factors Impact Investment Choices
Financial plans should start by identifying factors that impact the selection of investment products. We will discuss the customer's investment profile, including risk tolerance, time horizon, investment objectives, and liquidity needs.
6. FINRA Rule 2111: Suitability Obligations
Financial professionals are required to invest customers' money in appropriate investments. But what does this mean? This lesson will look closely at FINRA Rule 2111, which covers suitability of investments.
7. Tender Offers: Definition & SEC Regulations
In this lesson, we will learn about tender offers in the purview of corporate finance. We will also learn about the Securities and Exchange Commission regulations related to tender offers.
8. CBOE Rule 9.9: Definition & Importance
This lesson provides you with an overview of the Chicago Board Options Exchange's Rule 9.9 (Suitability of Recommendations), its application and its importance for the integrity of trade.
9. Verifying Investor Accreditation & Sophistication
In this lesson, we will define what an accredited investor is. We will also review the qualification criteria and discuss the importance of this designation.
10. Applying Investment Portfolio Analysis to Product Selection
Portfolio analysis is the evaluation of asset combinations and other factors to maximize a portfolio's return. Learn about how portfolio analysis is applied to product selection in this lesson.
11. What is Alpha in Finance? - Definition & Formula
In this lesson, you will learn what alpha is in finance, how it is used to measure return based on risk, and its relationship with beta. You will also learn the formula for calculating alpha.
12. What is Beta in Finance? - Definition & Formula
In this lesson, you will learn what beta is, how it is used in finance, the formula to calculate it, and how to best utilize it for success in investing.
13. Capital Asset Pricing Model (CAPM): Definition, Formula, Advantages & Example
Learn about the Capital Asset Pricing Model (CAPM), one of the foundational models in finance. We'll look at the underlying assumptions, how the model is calculated, and what it can do for you.
14. Providing Investment Strategies & Recommendations to Hold
Investment professionals are required to engage in reasonable efforts to provide customers with investment strategies and recommendations to hold. FINRA Rule 2214 and Municipal Securities Rulemaking Board (MSRB) Rule G-19 provide key guidance.
Earning College Credit
Did you know… We have over 200 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.
To learn more, visit our Earning Credit Page
Transferring credit to the school of your choice
Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.
Other chapters within the Series 7 Exam: Study Guide & Practice course
- Advertising & Public Communication in the Securities Industry
- The New Issues Market
- New Issue Regulations in the Securities Industry
- Brokerage Account Types & Restrictions
- Retirement Plans & Tax-Advantaged Accounts
- Handling Customer Investment Information & Discretionary Accounts
- Obtaining Supervisory Approvals for Investment Accounts
- Analyzing Customer Financial Statements
- Understanding Equity Securities
- Tax Treatment of Equity Securities Transactions
- Packaged Investment Products
- Variable Life Insurance & Annuities
- Real Estate Investment Trusts
- Direct Participation Programs
- Understanding Options in Investing
- Debt Securities
- Investing in Corporate Bonds
- Municipal Securities
- Municipal Securities Analysis & Regulations
- Registered Hedge Funds
- Asset-Backed Securities
- U.S. Government Agency Securities
- Investment Product Disclosures
- Customer Updates & Record Retention
- Customer Transactions & Confirmations
- Transactional Delivery Obligations & Settlement Procedures
- Investment Disputes & Customer Complaints
- Addressing Margin Issues