Financial Planning
Mock Exam
Course Introduction
Financial Planning is a course designed to provide students with a comprehensive understanding of the processes and strategies involved in managing personal and organizational finances. The course covers key topics such as budgeting, savings, investments, retirement planning, tax considerations, risk management, insurance, and estate planning. Students will learn how to set financial goals, assess financial situations, and develop effective plans to achieve both short-term and long-term financial objectives. By the end of the course, students will possess the analytical skills and practical knowledge necessary to make informed financial decisions in dynamic economic environments.
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) A financial service is defined by the Corporations Act to be provided in the circumstances where people:
A) give financial advice in relation to financial products
B) give legal advice in relation to financial products
C) make a market in a financial product
D) both a and c
Answer: D
Q2) The role of ASIC is to:
A) draft legislation governing the financial planning industry
B) monitor competition policy within the financial services sector
C) ensure compliance by practitioners with legal requirements governing the financial planning industry
D) establish and monitor compliance of the prudential regulations that govern the operations of financial institutions within Australia
Answer: C
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Chapter 2: Financial Planning Skills
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31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70600
Sample Questions
Q1) NPV is:
A) the comparison of what is proposed to be outlaid or invested in today's dollars with what the investment is predicted to return in today's dollars.
B) the sum of the future value of cash inflows less cash outflows.
C) both a and b
D) positive at all discount rates greater than the IRR.
Answer: A
Q2) An ordinary annuity is characterised by:
A) a series of cash flows that are identical in amount and occur at the end of consecutive time periods.
B) a series of cash flows that are identical in amount and occur at the start of consecutive time periods .
C) a single cash flow that occurs at the end of a particular time period and is accumulated over multiple time periods.
D) none of the above.
Answer: A
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Chapter 3: Taxation Planning
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26 Verified Questions
26 Flashcards
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Sample Questions
Q1) How much tax would be payable by the Lee Superannuation Fund with all members in accumulation mode which provided the following details for the 2013 financial year:
Sale of investments for a gross capital gain of $20,000 that were held for 9 months. Sale of investments for a gross capital gain of $30,000 that were held for 3 years.
Other assessable income of $100,000.
Allowable deductions of $20,000.
A) $9,000
B) *$18,000
C) $19,500
D) $20,000
Answer: B
Q2) The term(s) used to describe an employee taking a lower cash salary in lieu of other non- cash benefits include(s):
A) salary packaging.
B) salary sacrificing.
C) both a and b
D) none of the above.
Answer: C
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Chapter 4: Investment Choices
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) 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.
Q2) The mean and expected returns on an investment have the following relationship:
A) they are equivalent as they represent the same outcome.
B) the mean return is always greater than the expected return.
C) the mean return is always less than the expected return.
D) there is no relationship between the mean and expected returns.
Q3) Briefly explain some of the investment choices available to investors.
Q4) The importance of the efficient frontier lies in the fact that it:
A) identifies where the most efficient portfolios are.
B) is a curve and shows how diversification lets investors improve their efficient risk / return ratio.
C) represents the optimal mix of return and risk for a portfolio of investments given a required level of risk.
D) all of the above.
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Chapter 5: Direct Investment Fixed Interest and Shares
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) In terms of the asset classes of cash and fixed interest, nominate the incorrect statement:
A) Cash may be invested on the short term money market at the cash rate and is more liquid than fixed interest.
B) The essential feature of most fixed interest investments is that the interest rate is set at the start of the period and the principal is fixed.
C) Cash is always regarded as a riskier investment than fixed interest.
D) None of the above.
Q2) Contributing ordinary shares:
A) may be cumulative, participating or redeemable.
B) are shares issued on the understanding that dividends will not be payable until a future specified date when a particular project becomes profitable.
C) are completely paid up when initially issued.
D) are not completely paid up when initially issued.
Q3) What characteristics are typically associated with ethical investments?
Q4) Outline the general characteristics of the Securities Market Line (SML).
Q5) Who are the primary regulators of the Australian financial system?
Q6) Outline the primary differences between ordinary and preference shares.
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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) 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
Q2) Discuss the range of factors that you would consider when considering the purchase of a commercial property.
Q3) Establishing a market value for older buildings is more problematic using the: A) cost approach.
B) direct comparison approach.
C) capitalisation approach.
D) both a and b
Q4) Imagine you are having a discussion with a friend about investment in property. Your friend favours a direct form of investment because of the costs involved with a property fund but would like to know the benefits of investing in a property fund. Provide an outline of these benefits.
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Chapter 7: Managed Funds
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Nominate the incorrect statement in relation to standard deviation:
A) Standard deviation is the statistical measurement of dispersion of outcomes around a mean.
B) A higher measure of standard deviation infers higher risk.
C) In approximately 99% of the time, the returns will vary plus or minus two standard deviations from the average.
D) All of the above.
Q2) 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.
Q3) The relationship that exists between unsystematic risk and the number of securities held in an investment portfolio is:
A) non applicable as no relationship exists.
B) inverse until unsystematic risk is removed.
C) positive until unsystematic risk is removed.
D) inverse up to a maximum of 10 securities and then positive.
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Page 9
Chapter 8: Leveraged Investments
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Negative gearing arises where:
A) borrowings are not undertaken
B) annual income from an investment is greater than the deductible expenses
C) borrowings are on an interest-only basis
D) none of the above
Q2) What is the significance to the borrower of the loan-to-valuation ratio (LVR) adopted for margin lending?
Q3) 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
Q4) In Australia, index options can be exercised:
A) only on specified dates not including the expiry date
B) only after one month following acquisition
C) at any time up to and including the expiry date
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) 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.
Q2) Life insurance products can:
A) provide for insured amounts not necessarily related to the actual loss.
B) be regarded as indemnity-type products.
C) both an and b
D) none of the above.
Q3) 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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Page 11
Chapter 10: Superannuation
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Pursuant to the superannuation choice of fund rules:
A) the employer will nominate a default fund on the standard choice form provided to the employee.
B) the employer will not nominate a default fund on the standard choice form provided to the employee.
C) the employee can change their nominated fund at least once every 12 months.
D) both a and c
Q2) To be a complying superannuation fund the trust deed provisions of the fund:
A) must be equivalent to the SIS Act.
B) may be narrower than the SIS Act.
C) may be broader than the SIS Act.
D) have no direct relationship with the SIS Act.
Q3) Tax-free lump sum withdrawals from superannuation accounts by individuals are generally available:
A) once the individual reaches 55 years of age.
B) once the individual reaches 60 years of age.
C) is only available to a family member on the death of the individual.
D) none of the above.
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Page 12
Chapter 11: Retirement Planning
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30 Flashcards
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Sample Questions
Q1) Why is it important when modelling retirement income streams to consider survivor bias?
Q2) Max Colbey, 58 years of age, retired on 1 August 2014 with $500,000 accumulated in his superannuation account from which he will commence an account based income stream. The superannuation administrators have advised that his superannuation balance consists of a tax-free component of 36% with the remainder comprising a taxable (untaxed) component. In the 2015 year Max received a total of $70,000 in payments from the income stream. Max has a marginal tax of 37%. Ignoring the Medicare levy, the net tax payable by Max on the income stream will be:
A) $25,900.
B) $159,100.
C) $16,576.
D) $9,324.
Q3) What is the relevance of a deductible amount to income stream payments in retirement?
Q4) Discuss how the factor of self-esteem can sometimes be a difficult issue for retirees to adequately deal with.
Q5) Briefly discuss why a superannuation fund member's benefit balance is subject to the preservation rules.
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Chapter 12: Self-Managed Superannuation Funds
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) Where it has been decided to manage all SMSF assets in a single investment pool for a fund with multiple members, what are some of the issues that need to be considered by SMSF trustees when setting the fund investment objectives/strategies?
Q2) Why are there likely economies of scale in operating a SMSF?
Q3) The purchase of an asset by a SMSF from a member will be regarded as being on an arm's length basis when it is purchased at:
A) not more than market value.
B) not less than market value.
C) market value.
D) none of the above.
Q4) 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
Q5) Briefly discuss possible reasons why changes were made to the SIS Act in 2011 regarding SMSFs investing in collectables/personal use assets.
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Page 14
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) Briefly discuss how the income test for family benefits, child care benefits and the baby bonus differs from the taxation calculation of income.
Q3) The rationale underlying the provision of social services is based on:
A) the provision of assistance to alleviate financial hard?ship of the unemployed elderly.
B) philosophical reasons, practical and societal arguments.
C) where a person is greater than age pension age and is permanently incapacitated.
D) the provision of assistance to people of good character and those who have not deserted their spouses.
Q4) In your opinion, why is the government in the process of changing the eligibility age for the age pension for some applicants?
Q5) Outline the extent of the assets test exemption for the family home.
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Chapter 14: Estate Planning
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70588
Sample Questions
Q1) The principal residence of the deceased is normally exempt from the CGT where the residence:
A) is sold within 3 years of the date of death.
B) is sold within 5 years of the date of death.
C) becomes the principal residence of the deceased's spouse from the date of death.
D) is sold by the executor with the proceeds distributed to the deceased's children within 5 years of the date of death.
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) What is the importance of testamentary capacity in the process of making a will?
Q4) In Australia, a will falls under:
A) state jurisdiction.
B) federal jurisdiction.
C) federal jurisdiction unless seen to be prejudicial to a family member.
D) none of the above.
Q5) What are the general consequences where a person dies intestate?
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Chapter 15: Development of a Statement of Advice
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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) 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) Provide an outline of the best interest obligations for financial planners adopted as part of the government FOFA reforms into the financial planning industry.
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