Retirement Planning Practice Exam
Course Introduction
Retirement Planning is a comprehensive course designed to equip students with the knowledge and skills necessary to effectively plan for a financially secure retirement. The course covers important topics such as understanding retirement needs, evaluating retirement income sources, analyzing social security and pension plans, investment strategies, tax implications, and risk management. Students will learn how to create individualized retirement plans, make informed decisions regarding healthcare and long-term care, and adapt their strategies to changing personal and economic circumstances. The course combines theoretical concepts with practical tools to help students develop and implement successful retirement plans for themselves or their clients.
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
Page 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 term personal financial planning generally implies:
A) the achievement of a financial outcome within a specified time period
B) successfully gaining a job promotion
C) winning the lottery within a specified time period
D) both a and b
Answer: A
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) The highest credit rating from those indicated below would be:
A) CCC
B) AAA
C) A
D) BBB
Answer: B
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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) In the calculation of the savings ratio, savings is defined as:
A) the amount left over after deducting all expenditures from income.
B) the balance of an individual's funds on deposit at a bank at the end of a period.
C) the amount left over after deducting expenditure from income after we add back items that may be regarded as an investment.
D) both a and b
Answer: C
Q2) Outline circumstances where the NPV form of investment analysis is preferred to using the IRR method.
Answer: Where there is more than one sign change in the periodic cash flows (inflows and outflows) for an investment proposal the NPV form of investment analysis is preferred to using the IRR. This is because given the nature of the IRR calculation more than one IRR value can be calculated where multiple cash flow sign changes occur. As only a single NPV will be calculated regardless of the presence of multiple cash flow sign changes, this method will be preferred in these circumstances.
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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) The Australian company income tax rate is:
A) 10%
B) 15%
C) 30%
D) none of the above
Answer: C
Q2) The taxable capital gain from the sale of an investment held for at least 12 months can potentially be calculated in which of the following ways?
A) Indexation method or discount method.
B) Sale price plus purchase price.
C) Purchase price less sale price.
D) None of the above.
Answer: A
Q3) Marginal income tax rates for individuals in Australia are best described as: A) regressive.
B) progressive.
C) constant.
D) none 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) Briefly explain the effect of a multiple asset class portfolio as reported by Gibson (2000).
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) Describe how investor behaviour can challenge the assumption that investors are rational.
Q4) When selecting suitable products for investment, personal investors often are attracted to property as an asset class because: A) returns are expected to keep pace with inflation.
B) it is a tangible investment unlike the other asset classes.
C) both a and b
D) none of the above.
Q5) Explain the general range of classifications used by financial planners.
Q6) Explain the concept of risk in the field of finance.
Q7) How does diversification reduce risk?
Q8) Briefly explain some of the investment choices available to investors.
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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) Mickey Ronaldo purchased a 180 day Commonwealth Treasury Note (T-note) having a face value of $100,000 on 15 April 2014. The purchase price of the T-note was $96,730.
a) Calculate Mickey's annualised nominal rate of return based on the face value of the T-note.
b) Calculate Mickey's annualised nominal rate of return based on the purchase price of the T-note.
c) Which of the above annualised nominal rates of return is more representative of Mickey's actual rate of investment return?
Q2) In terms of discount securities nominate the incorrect statement:
A) Instruments such as BABs are discount securities in that their selling prices are less than (at a discount to) their face values.
B) The face value of the security is sold at a discount so that the amount paid on maturity is equal to the face value of the security.
C) Pays a coupon or interest payment monthly until maturity.
D) All of the above.
Q3) What characteristics are typically associated with ethical investments?
Q4) Briefly explain how lenders use the cash rate when setting interest rates.
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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) Where a single homeowner dies in 2014 and bequests their family home which was originally purchased in 2001 to a beneficiary:
A) the home will be subject to a potential capital gains tax liability if sold by the beneficiary within 1 year following the death of the homeowner using the original purchase price as the cost base.
B) the home will be exempted from a potential capital gains tax liability if sold by the beneficiary within 2 years following the death of the homeowner.
C) the home will be valued at its market value at the date of death of the homeowner and subject to sale on any subsequent disposal by the beneficiary.
D) none of the above.
Q2) The Net Present Value (NPV) approach:
A) is a suitable form of analysis for property investments.
B) would include net rental income as cash outflows as part of NPV analysis.
C) results in a greater positive NPV / lower negative NPV when a relatively higher discount rate is used.
D) both b and c
Q3) Outline the taxation advantages of investing in a property trust.
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Page 8
Chapter 7: Managed Funds
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70595
Sample Questions
Q1) Unlisted managed funds:
A) are closed ended structures.
B) are structured so that a prospective unitholder will purchase units from other unitholders.
C) operate as a trust structure and issues units to investors.
D) all of the above.
Q2) Unlisted managed funds that have a bid-offer spread to allow for transaction costs:
A) provide a selling price higher than the buying price.
B) provide a buying price higher than the selling price.
C) provide a buying price equal to the selling price.
D) none of the above.
Q3) Beta risk is particularly relevant for fund managers adopting which investment approach?
A) Passive investing.
B) Active investing.
C) Contrarian investing.
D) None of the above.
Q4) Briefly explain the reasons why the unit price of an unlisted managed fund is likely to change on a regular basis.
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Chapter 8: Leveraged Investments
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The benefits arising from margin lending over traditional principal and interest mortgage loans typically include:
A) a lower interest rate than a mortgage loan
B) liquidity
C) investment diversification opportunities
D) both b and c
Q2) Briefly discuss the principal benefits of undertaking gearing as an investment strategy.
Q3) What is the significance to the borrower of the loan-to-valuation ratio (LVR) adopted for margin lending?
Q4) Briefly discuss the options available to a futures trader holding an 'open' position on a futures contract.
Q5) Where the value of secured assets falls below an agreed debt-to-asset ratio for a margin loan, what action will be required to be taken?
A) the lender must meet a margin call on the loan
B) the borrower must meet a margin call on the loan
C) the lender will require the loan to be discharged in full
D) none of the above
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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) 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.
Q3) In Australia, federal government regulations prohibit health insurance providers from charging higher insurance premiums for people who: A) are obese.
B) smoke.
C) drink alcohol.
D) all of the above.
Q4) The areas from which a legal liability can arise include: A) common law.
B) statute law.
C) contract.
D) all of the above.
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Chapter 10: Superannuation
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Briefly explain why the concept of fiduciary responsibilities is so important for trustees of superannuation funds.
Q2) The 'in-house' assets rule exempts:
A) residential property.
B) business real property.
C) both a and b
D) unlisted Australian securities.
Q3) The fiduciary responsibilities of superannuation fund trustees in Australia are based on the:
A) common law.
B) Superannuation Industry (Supervision) Act.
C) both a and b
D) the APRA Act.
Q4) Kyle Templar is still working full-time at 77 years of age. The maximum amount that he can contribute as a personal superannuation contribution in the current financial year (2014) is:
A) $25 000
B) $35 000
C) $150 000
D) $0
Page 12
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Chapter 11: Retirement Planning
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) The issue of longevity risk has been identified as an increasing problem in more recent times, particularly in a relatively low-inflationary environment. Comment on this statement.
Q2) A lower relative inflation rate for a given real rate results in:
A) a lower nominal rate of return.
B) a higher nominal rate of return.
C) no change in the nominal rate of return.
D) none of the above.
Q3) In accordance with financial mathematics concepts, for a given nominal rate of return and present value, a larger number of periods all other things being equal will:
A) increase the payment for a superannuant in pension mode.
B) decrease the payment for a superannuant in pension mode.
C) leave the payment unchanged for a superannuant in pension mode.
D) either a or c
Q4) What is the relevance of a deductible amount to income stream payments in retirement?
Q5) Why is it important when modelling retirement income streams to consider survivor bias?
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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) When a SMSF undertakes borrowings to acquire an investment the lenders recourse against the SMSF is limited to:
A) the asset subject to the borrowing.
B) any real property held by the SMSF.
C) both a and b
D) 50% of the total fund assets.
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) SMSFs are regulated by the:
A) APRA.
B) ATO.
C) ASIC.
D) none of the above.
Q4) Why are there likely economies of scale in operating a SMSF?
Q5) Under what circumstances must an actuary be appointed to a SMSF and what is their primary role when appointed?
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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) A sickness allowance is available to a claimant in which of the following circumstances?
A) Where a person is at least 21 years of age but less than age pension age and is temporarily incapacitated and must have a job or full time study to return to when recovered.
B) Where a person is at least 21 years of age but less than age pension age and is permanently incapacitated.
C) Where a person is greater than age pension age and is permanently incapacitated.
D) Where a person of any age is temporarily incapacitated and will return to a job or full-time study when recovered.
Q2) Government residential aged care facilities include:
A) hostels, nursing homes and retirement villages.
B) hostels, nursing homes, retirement villages and granny flats.
C) hostels and nursing homes.
D) hostels and retirement villages.
Q3) Briefly discuss how the income test for family benefits, child care benefits and the baby bonus differs from the taxation calculation of income.
Q4) Outline the extent of the assets test exemption for the family home.
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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) Differentiate between estate and non-estate assets and include examples of each type.
Q2) The donor is the person:
A) delegating the power in a power of attorney.
B) receiving the power in a power of attorney.
C) acting as a witness in a power of attorney.
D) none of the above.
Q3) The Income Tax Assessment Act applies which of the following rules to the taxation of a deceased estate?
A) The estate is taxed at individual adult tax rates for up to 2 years from the date of death.
B) The estate is taxed at individual adult tax rates for up to 3 years from the date of death.
C) The estate is taxed at individual adult tax rates for up to 5 years from the date of death.
D) The estate is taxed at company tax rates for up to 2 years from the date of death.
Q4) What are the general consequences where a person dies intestate?
Q5) What is the importance of testamentary capacity in the process of making a will?
Q6) Briefly discuss the circumstances in which a power of attorney can be cancelled.
Page 16
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Chapter 15: Development of a Statement of Advice
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Prior to engaging the services of a financial planner, an introductory meeting between the financial planner and the client is normally arranged and serves a number of purposes including to:
A) establish the relationship between the planner and the client.
B) provide the planner with an opportunity to learn about the client, the client's cir?cumstances and needs and to determine what the client is hoping to accomplish from the relationship.
C) provide the client with an opportunity to learn about the planner and the services they offer and whether the planner is likely to be able to satisfy the client's requirements. D) all of the above.
Q2) In what circumstances can a record of advice (ROA) document be prepared for a financial planning client and what format does the financial planner need to follow in its preparation?
Q3) The balance sheet, income statement and cash flow statement are examples of:
A) economic indicators.
B) financial ratios.
C) personal financial statements.
D) technical analysis.
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