Financial Planning
Exam Materials
Course Introduction
Financial Planning is a comprehensive course that explores the principles, tools, and strategies essential for effective personal and professional financial management. Students will learn to assess financial situations, set realistic goals, develop budgets, understand investments, manage risks, and plan for taxes, retirement, and estate needs. The course emphasizes practical application through case studies and scenarios, equipping learners with skills to create and evaluate financial plans that align with short-term and long-term financial objectives.
Recommended Textbook
Financial Planning 2nd Edition by Warren McKeown
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15 Chapters
443 Verified Questions
443 Flashcards
Source URL: https://quizplus.com/study-set/3555
2
Chapter 1: Personal Financial Planning
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70601
Sample Questions
Q1) The highest credit rating from those indicated below would be:
A) CCC
B) AAA
C) A
D) BBB
Answer: B
Q2) The value of the expected shortfall the working population will have in building an adequate retirement benefit is termed the:
A) Retirement Standard (RS)
B) Retirement Savings Gap (RSG)
C) Target Retirement Benefit (TRB)
D) none of the above
Answer: B
Q3) A close reading of chapter 1 provides which of the following lessons for investors:
A) be aware of market cycles
B) do not diversify unless there are no other options available
C) both a and b
D) none of the above
Answer: A
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Page 3
Chapter 2: Financial Planning Skills
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31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70600
Sample Questions
Q1) A loan is made to a borrower at a specified nominal interest rate. In order for the loan to be fully repaid over a specified term:
A) periodic repayments would be the same whether they were made at the start or end of each period.
B) periodic repayments would be greater if they were made at the start rather than at the end of each period.
C) periodic repayments would be greater if they were made at the end rather than at the start of each period.
D) whether periodic repayments would be greater if they were made at the start or at the end of each period would depend on the specified interest rate.
Answer: C
Q2) A personal balance sheet would not generally include:
A) dividends received during a period.
B) a motor vehicle.
C) a collection of rare banknotes.
D) both a and b
Answer: A
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Chapter 3: Taxation Planning
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26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/70599
Sample Questions
Q1) Which of the following items are generally exempt from the capital gains tax?
A) Main residence.
B) Passenger motor cars.
C) Gambling winnings.
D) All of the above.
Answer: D
Q2) Where a shareholder is entitled to receive a dividend it will be included as part of their assessable income for the relevant financial year unless it is:
A) a fully franked dividend.
B) an unfranked dividend.
C) subject to a dividend reinvestment scheme.
D) none of the above.
Answer: D
Q3) Examples of income tax offsets in Australia include:
A) subscriptions to professional journals.
B) imputation or franked credits.
C) interest on loans used for investment purposes.
D) all of the above.
Answer: B
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Page 5
Chapter 4: Investment Choices
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29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70598
Sample Questions
Q1) To be _ _% confident that the actual returns will lie in a given range, we simply determine the values of the expected return plus two standard deviations and the expected return minus two standard deviations, assuming the returns are normally distributed.
A) 42
B) 68
C) 95
D) 99
Q2) Facts common to most investment scams include:
A) investors being provided with a product disclosure statement.
B) the promise of returns equivalent to bank deposits.
C) both a and b
D) none of the above.
Q3) The relative investment performance of the major asset classes in the last 10 and 20 years as included in the text shows:
A) Australian shares to have underperformed listed property.
B) Australian bonds to have underperformed listed property.
C) hedged international shares to have outperformed unhedged international shares.
D) all of the above.
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Page 6
Chapter 5: Direct Investment Fixed Interest and Shares
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29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70597
Sample Questions
Q1) The yield curve:
A) typically has a normal shape which slopes downward to the right.
B) is a graph of interest rates relative to their risk.
C) may be flat when short-term and long-term rates are virtually the same, and a humped yield curve may occur when medium-term rates are higher.
D) all of the above.
Q2) Using sustainable growth rates:
A) seeks to overcome the limitations of using past growth rates as a reliable indicator of future growth rates.
B) requires companies to have a retention ratio of less than 100%.
C) both a and b
D) none of the above.
Q3) The capital asset pricing model (CAPM):
A) recognises a positive relationship between risk and return.
B) uses beta as the relevant measure of market risk.
C) requires a value for the risk-free rate.
D) all of the above.
Q4) Briefly explain how lenders use the cash rate when setting interest rates.
Q5) Outline the general characteristics of the Securities Market Line (SML).
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Chapter 6: Direct Investment - Property
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29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70596
Sample Questions
Q1) Tax-deferred distributions from property trusts:
A) are declared by the unitholder recipient as income in the tax return in the year of receipt.
B) are used by the unitholder recipient to decrease the cost base of the investment in the property trust.
C) are used by the unitholder recipient to increase the cost base of the investment in the property trust.
D) are only available to unitholder recipients where they have held their investment in the property trust for at least 12 months.
Q2) The capitalisation approach results in:
A) a higher market value the greater the capitalisation rate used for a given net rental income stream.
B) a lower market value the greater the capitalisation rate used for a given net rental income stream.
C) a lower market value the lower the capitalisation rate used for an increasing net rental income stream.
D) both a and c
Q3) Outline the taxation advantages of investing in a property trust.
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Chapter 7: Managed Funds
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70595
Sample Questions
Q1) Cash management funds would be unlikely to invest in which of the following assets?
A) Overnight deposits.
B) Mix of short and medium-term government securities.
C) Mix of international short-term government securities.
D) Mortgage loans.
Q2) The indirect cost ratio (ICR):
A) measures management costs not deducted directly from investors' account balances to the average net assets of the fund.
B) measures the average net assets of the fund divided by the management costs deducted directly from investors' account balances.
C) approximates current performance bonuses.
D) all of the above.
Q3) Briefly explain the reasons why the unit price of an unlisted managed fund is likely to change on a regular basis.
Q4) Briefly outline the 'three pillars' institutional framework for managed investments and securities in Australia.
Q5) Briefly differentiate active and passive fund management styles.
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9
Chapter 8: Leveraged Investments
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70594
Sample Questions
Q1) Some variations of standard interest and principal mortgages available to investors include:
A) equity release loans, where surplus equity above agreed levels may be withdrawn
B) interest-only loans with the entire principal payable at the end of the loan
C) reverse mortgages
D) all of the above
Q2) The lender in a mortgage contract is referred to as the:
A) mortgagee
B) pledger
C) both a and b
D) mortgagor
Q3) The presence of rising asset prices and concessional tax rates on capital gains in a stable interest rate environment is more preferable for a negatively geared share investment than which of the following economic conditions?
A) stable asset prices and rising interest rates
B) rising asset prices and rising interest rates
C) decreasing asset prices and relatively high tax rates on capital gains
D) all of the above
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10
Chapter 9: Risk Management and Insurance
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70593
Sample Questions
Q1) Why is insurance cover more important in the event of prolonged illness or injury in comparison to such event arising for a relatively short duration?
Q2) Risk management includes the following steps, in order, to be addressed:
A) identifying risks, developing control and financing measures, implementing agreed upon plans and on-going review.
B) implementing agreed upon plans, identifying risks, developing control and financing measures and on-going review.
C) developing control and financing measures, implementing agreed upon plans, identifying risks and on-going review.
D) developing control and financing measures, identifying risks, implementing agreed upon plans and on-going review.
Q3) Comment on the factors that are relevant in selecting the type of motor vehicle insurance that would be most appropriate following a recent vehicle purchase.
Q4) The use of the multiple approach for calculating a lump sum benefit to be taken out pursuant to a life insurance policy has been strongly criticised as being too simplistic in nature. Outline the basis for such criticism.
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Chapter 10: Superannuation
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70592
Sample Questions
Q1) The tax rate withheld by the recipient superannuation fund on non-concessional contributions within the relevant cap is:
A) 15%.
B) 30%.
C) 0%.
D) none of the above.
Q2) Concessional (tax-deductible) contributions to a superannuation fund within the relevant cap are:
A) tax-free when received by the fund.
B) taxed at 10% when received by the fund.
C) taxed at 15% when received by the fund.
D) taxed at 15% when withdrawn from the fund.
Q3) A superannuation fund with all members in accumulation mode receiving its taxable earnings in the current year of income in the form of interest on investments and fully franked dividends at the company tax rate of 30% on shares will have:
A) greater gross cash earnings than its assessable income.
B) greater assessable income than its gross cash earnings.
C) gross cash earnings equal to its assessable income.
D) either a or c
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Page 12
Chapter 11: Retirement Planning
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70591
Sample Questions
Q1) Discuss how the factor of self-esteem can sometimes be a difficult issue for retirees to adequately deal with.
Q2) Mr Jobe Laney has recently invested part of his retirement funds, an amount of $65,000 into a term deposit with the Wakpac Credit Union at an interest rate of 6% with interest compounding annually and all funds returned at maturity. If inflation was forecast to be 3% in year 1 and 4% in year 2, using a method that calculates a real rate of return each year, calculate the real amount (in dollars) that Jobe would have on maturity and the overall real rate of return on the investment.
Q3) The main difference between transition to retirement income streams (TTR) and account-based pensions relate to:
A) a lower maximum annual income drawdown for TTRs.
B) a lower minimum annual income drawdown for TTRs.
C) the capital balance of TTRs cannot be commuted until the superannuant reaches preservation age.
D) both a and c
Q4) Briefly discuss some of the principal decisions that a person needs to make in relation to the use of their accumulated retirement funds.
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Chapter 12: Self-Managed Superannuation Funds
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70590
Sample Questions
Q1) A SMSF auditor must be:
A) a registered company auditor.
B) a member of a designated organisation.
C) either a or b
D) appointed for a continuous period of no more than 5 years.
Q2) SMSF trustees cannot:
A) borrow more than $500,000 for an individual asset acquisition.
B) undertake transactions on an arm's length basis.
C) lend money or provide financial assistance to members.
D) both b and c
Q3) A SMSF member moving their accumulated fund balance of their member account from the accumulation phase to the pension phase will:
A) no longer be able to make contributions to their member account in pension phase.
B) have any unrealised accumulated capital gains tax liability removed from their member account.
C) be required to undertake a minimum drawdown each year from their member account.
D) all of the above.
Q4) Why are there likely economies of scale in operating a SMSF?
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Chapter 13: Social Security
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29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70589
Sample Questions
Q1) Eligibility for the Schoolkids bonus:
A) is based on a separate assets and income test.
B) requires families or students to register for the bonus payment.
C) both a and b
D) results in 2 instalment payments being made over the course of the year.
Q2) The pension assets test threshold for home owners:
A) is greater for a single person than for a couple.
B) results in no pension payable if the maximum threshold is exceeded for a single person but not necessarily for a couple.
C) results in no pension payable if the maximum threshold is exceeded.
D) will vary depending on whether the family home has more or less than 3 bedrooms.
Q3) In Australia, social security services are provided by:
A) Centrelink .
B) the Commonwealth Services Delivery Agency.
C) the Department of Veterans Affairs.
D) all of the above.
Q4) On what basis do you consider that some assets are allocated as fully assessable, partly assessable or exempt from the pension assets test?
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Page 15
Chapter 14: Estate Planning
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70588
Sample Questions
Q1) Briefly discuss the circumstances in which a power of attorney can be cancelled.
Q2) In Australia, probate:
A) is granted by the Supreme Court.
B) means 'proof of the will'.
C) is required for all estates.
D) both a and b
Q3) What are the general consequences where a person dies intestate?
Q4) A valid will requires:
A) signing by the willmaker in the presence of witnesses.
B) signatures to be written in blue or black pen.
C) the witness to have testamentary capacity.
D) all of the above.
Q5) The trust settlor:
A) can only commence a trust following the death of the willmaker.
B) cannot be a beneficiary of the trust.
C) must settle the trust with a cash sum of at least $100.
D) both b and c
Q6) Briefly explain the differences between a testamentary trust and an inter vivos trust.
Q7) What is the importance of testamentary capacity in the process of making a will?
Page 16
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Chapter 15: Development of a Statement of Advice
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70587
Sample Questions
Q1) Typically the financial planner will need to make a number of assumptions in the preparation of a comprehensive and detailed SOA. Provide details as to some of the assumptions used by the financial planner including the basis for the relevant amounts.
Q2) An SOA must:
A) tailor advice to the needs of the client.
B) incorporate the level of the client's financial literacy in its presentation.
C) assess the complexity of the advice provided.
D) all of the above.
Q3) The three types of SOAs used by financial planners are typically the:
A) small investment plan, further advice plan and a comprehensive plan.
B) no-advice plan, limited SOA and a comprehensive plan.
C) no-advice plan, further advice plan and a comprehensive plan.
D) both a and b
Q4) The financial planner has a part to play in preventing and detecting:
A) money laundering activities.
B) infectious diseases.
C) terrorism activities.
D) both a and c
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Page 17