Financial Services
Exam Review
Course Introduction
This course offers an in-depth exploration of the financial services industry, focusing on the roles and operations of key institutions such as banks, insurance companies, investment firms, and credit unions. Students will examine the regulatory environment, risk management techniques, and evolving technological innovations shaping the sector. Through real-world case studies and practical applications, the course will cover topics including financial products and services, client relationship management, ethical considerations, and the impact of globalization on financial markets. This foundational knowledge prepares students for careers in finance and enhances their understanding of how financial services support economic development.
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) In Australia, it is expected that by about 2050 there will be approximately:
A) 2.7 people in working age groups for each retired person
B) 3.5 people in working age groups for each retired person
C) 5.0 people in working age groups for each retired person
D) 4 males in working age groups and 2.5 females in working age groups for each retired person
Answer: A
Q2) Superannuation guarantee contributions in Australia are levied on:
A) employers and the self-employed
B) employers
C) employees
D) both b and c
Answer: B
Q3) Generally accepted finance principles would support which of the following statements?
A) 'high return generally equals high risk'
B) 'high return generally equals low risk'
C) 'high risk is generally inversely related to high return'
D) none of the above
Answer: A
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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) A period of negative savings where income does not meet the required level of expenditures could also be regarded as a(n):
A) asset.
B) increase in equity.
C) savings surplus.
D) savings deficit.
Answer: D
Q2) The NPV of an investment requiring an initial outlay of $10,000 at a discount rate of 6% which provides end-of-year cash flows of; year 1 - $3,000 (inflow), year 2 - $11,000 (inflow), year 3 - $1,500 (outflow) and year 4 - $7,000 (inflow) will be approximately:
A) $6,163.
B) $6,905.
C) $9,424.
D) $19,500.
Answer: B
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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) 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
Q2) For negative gearing purposes:
A) the benefit of the tax loss created depends on the marginal tax rate of the lender.
B) the tax loss created by the investor can be offset against salary and other net investment income in the same financial year.
C) total allowable deductions excluding interest expense from the investment will always exceed net investment income.
D) all of the above.
Answer: B
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Chapter 4: Investment Choices
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29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70598
Sample Questions
Q1) In finance, risk may be defined as:
A) the chance of a loss of capital.
B) the chance of loss of purchasing power.
C) the variability of returns.
D) all of the above.
Q2) From the previous question Sally has now asked you to calculate the risk attached to each of the investments proposed in Nimasae, Memorest and Tenex. She has also sought comments on the return / risk relationship for each of the individual investments by ranking each of the return and risk of the investments from lowest to highest. Further demonstrate your discussion of the return / risk relationship by showing Sally the likely range of returns that could eventuate for each asset with a 95% level of accuracy.
Q3) Standard deviation:
A) is equal to the variance squared.
B) measures the variability of returns around the expected return.
C) is found by taking the square root of expected return.
D) all of the above.
Q4) Briefly explain some of the investment choices available to investors.
Q5) How does diversification reduce risk?
Q6) Explain the concept of risk in the field of finance.
Page 6
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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) The electronic transfer and settlement system for representing share ownership in Australia is referred to as:
A) CHECKERS.
B) CARDS.
C) CHESS.
D) SFE.
Q2) Who are the primary regulators of the Australian financial system?
Q3) 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.
Q4) Outline the general characteristics of the Securities Market Line (SML).
Q5) What characteristics are typically associated with ethical investments?
Q6) Briefly explain how lenders use the cash rate when setting interest rates.
Q7) 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 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
Q2) A person's equity in their own home valued 10-years after initial purchase:
A) is the difference between the current market value of the home and their initial purchase price.
B) is the difference between the current market value of the home and the amount initially borrowed on a principal and interest home loan.
C) will rise with principal loan repayments on borrowings assuming housing prices at least remain constant.
D) will decrease with principal loan repayments on borrowings assuming housing prices at least remain constant.
Q3) Outline the taxation advantages of investing in a property trust.
Q4) Discuss the range of factors that you would consider when considering the purchase of a commercial property.
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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) 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.
Q3) 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.
Q4) Briefly explain the role of the single responsible entity.
Page 9
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Chapter 8: Leveraged Investments
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70594
Sample Questions
Q1) Investment products or instruments that derive their value from underlying assets include:
A) contracts for difference (CFDs)
B) options
C) warrants
D) all of the above
Q2) 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
Q3) 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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Page 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) Tony Verdello's 4-year old property located on a fault line was recently severely affected by an earthquake. The total replacement value of Tony's property including contents at the time of the earthquake was $400,000. The percentage of the property damaged by the earthquake was estimated by the insurance company claims officer to be 60%. The property was originally built by Tony at a total cost including contents of $245,000. The specific information included in Tony's home and contents insurance policy relating to claims made are as follows:
? insurance is provided on a 'new for old' basis
? the total sum insured is $280,000
? a co-insurance clause operates which is set at 80% of the current replacement value of the home and contents.
Advise Tony as to the amount of the total home and contents claim payable by the insurance company and how this would compare to the maximum claim otherwise available.
Q2) Severity limitations in insurance contracts:
A) seek to transfer the financial risk to the insurer.
B) limit the liability of the insured.
C) none of the above.
D) may include the removal of policy excesses.
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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) Salary sacrifice superannuation contributions are:
A) tax-deductible to the employer making the contribution.
B) treated as tax-free upon receipt by the recipient superannuation fund.
C) a decision that must be made retrospectively.
D) all of the above.
Q2) Using the individual tax rate table in chapter 3 of the text, calculate the amount of tax that Mr. Robbie Anders (56 years of age) would save by contributing $35,000 as a salary sacrifice superannuation contribution in the 2015 financial year instead of receiving the same amount ($35,000) as part of his annual salary of $105,000. For the purposes of this question ignore the Medicare levy and any superannuation guarantee payments for this year.
Q3) Reasonable benefit limits (RBLs) for superannuation account balances:
A) do not currently apply in Australia.
B) currently restrict the lump sum withdrawal able to be made from superannuation by retirees.
C) currently restrict the annual income stream withdrawal able to be made from superannuation by retirees.
D) none of the above.
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Page 12
Chapter 11: Retirement Planning
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30 Verified Questions
30 Flashcards
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Sample Questions
Q1) What is the relevance of a deductible amount to income stream payments in retirement?
Q2) As a result of divorce or separation, splitting of superannuation money:
A) is relatively straightforward for accumulation style superannuation accounts and can happen immediately.
B) may result in a payment split for defined benefit style superannuation accounts where the funds remain in the defined benefit account until retirement.
C) both a and b
D) can only occur for accumulated superannuation balances exceeding $250,000.
Q3) Briefly discuss why a superannuation fund member's benefit balance is subject to the preservation rules.
Q4) Discuss how the factor of self-esteem can sometimes be a difficult issue for retirees to adequately deal with.
Q5) Why is it important when modelling retirement income streams to consider survivor bias?
Q6) 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.
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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) Actions by trustees for a particular offence that are held to be non-compliant with the superannuation rules can result in the trustees being exposed to:
A) both civil prosecution up to a maximum penalty of $220,000 and criminal action with a maximum penalty of 5 years in prison.
B) either civil prosecution up to a maximum penalty of $220,000 or criminal action with a maximum penalty of 5 years in prison.
C) either civil prosecution up to a maximum penalty of $220,000 or criminal action with a maximum penalty of 10 years in prison.
D) none of the above.
Q3) In-specie member superannuation contributions to a SMSF cannot include:
A) real business property.
B) widely held managed funds.
C) non-concessional contributions.
D) none of the above.
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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) 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) 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.
Q3) Differentiate the youth allowance calculations where the applicant is classified as independent or not independent.
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) 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) What is the importance of testamentary capacity in the process of making a will?
Q3) The superannuation fund trustee has discretion over the distribution of a deceased member's account balance unless there is a valid:
A) binding death benefit nomination.
B) non-binding death benefit nomination.
C) will made by the deceased member.
D) power of attorney made by the deceased member.
Q4) Outline how the use of a trust can provide useful asset protection for individuals.
Q5) Briefly discuss the circumstances in which a power of attorney can be cancelled.
Q6) What are the general consequences where a person dies intestate?
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Page 16
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) 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
Q2) 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.
Q3) Examples of assumptions that are often required to be made by the financial planner in the preparation of a SOA include those relating to:
A) tax rates.
B) age of the client.
C) age of the client
D) both a and c
Q4) Provide an outline of the best interest obligations for financial planners adopted as part of the government FOFA reforms into the financial planning industry.
Q5) Discuss the form and extent of remuneration disclosure that applies to financial advisers.
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