Professional Practice in Financial Planning Exam Bank
Course Introduction
This course provides an in-depth exploration of the practical skills and ethical frameworks necessary for effective professional practice in financial planning. Students will engage with real-world case studies and scenario analyses to develop competencies in client relationship management, regulatory compliance, and the delivery of comprehensive financial advice. Emphasis is placed on understanding industry standards, communicating complex financial information clearly, and integrating technical knowledge with ethical decision-making to address clients diverse financial goals. The course prepares students for professional certification and responsible practice within the evolving financial planning landscape.
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) 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
Q2) Monetary policy, administered by the RBA, is concerned with control over interest rates and the amount of money in circulation and is used to:
A) stimulate the economy by increasing interest rates
B) stimulate the economy by decreasing interest rates
C) slow the economy by increasing interest rates
D) both b and c
Answer: D
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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Chapter 2: Financial Planning Skills
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31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70600
Sample Questions
Q1) Mr Rolf Weasley has recently purchased $12,000 worth of shares in Perloins Ltd. Given the relative risk exposure of Perloins Ltd., Rolf expects an annual rate of return on the investment of 9% p.a. compounded at regular intervals of 4 months. Approximately how much would Rolf expect to realise from the sale of his investment in 5 years from now?
A) $13,911
B) $18,463
C) $18,696
D) $43,710
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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4
Chapter 3: Taxation Planning
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26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/70599
Sample Questions
Q1) The Commonwealth Government has exclusively levied income tax in Australia since:
A) 1912
B) 1936
C) 1942
D) 1997
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) Sources of taxation law includes:
A) Income Tax assessment Act 1997 (ITAA97).
B) case law.
C) both a and b
D) Corporations Act.
Answer: C
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Page 5
Chapter 4: Investment Choices
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) Briefly explain some of the investment choices available to investors.
Q2) In terms of behavioural theory, overconfidence can result in:
A) individual investors being mistakenly convinced that they can regularly beat the market.
B) sharemarket investors less likely to speculate by regularly trading in stocks.
C) people deviating from rational thinking in making judgements where there is an element of uncertainty.
D) both a and c
Q3) 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.
Q4) Briefly explain the effect of a multiple asset class portfolio as reported by Gibson (2000).
Q5) Explain the general range of classifications used by financial planners.
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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) 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.
Q2) Investing in precious metals:
A) is often undertaken as a hedge against inflation.
B) provides both income and capital returns to investors.
C) is subject to significant supply and demand pressures.
D) both a and c
Q3) Who are the primary regulators of the Australian financial system?
Q4) The electronic transfer and settlement system for representing share ownership in Australia is referred to as:
A) CHECKERS.
B) CARDS.
C) CHESS.
D) SFE.
Q5) Outline the primary differences between ordinary and preference shares.
Q6) Outline the general characteristics of the Securities Market Line (SML).
Q7) 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) 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) 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.
Q3) Outline the taxation advantages of investing in a property trust.
Q4) Outline six of the positive characteristics that are associated with an investment in the property market.
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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) 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.
Q2) With managed funds it is NOT possible to diversify across:
A) asset classes.
B) management styles.
C) investment sectors.
D) none 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.
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
Source URL: https://quizplus.com/quiz/70594
Sample Questions
Q1) Futures contracts:
A) rarely end in the physical delivery of the underlying asset
B) require a deposit or initial margin
C) are typically reversed out prior to expiry
D) all of the above
Q2) The general risk/reward trade-off associated with warrants shows that:
A) capital protected warrants are more risky than self funding instalment warrants
B) self funding instalment warrants are more risky than hot instalment warrants
C) instalment warrants are more risky than hot instalment warrants
D) none of the above
Q3) 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
Q4) Briefly discuss the options available to a futures trader holding an 'open' position on a futures contract.
Q5) What is the significance to the borrower of the loan-to-valuation ratio (LVR) adopted for margin lending?
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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) The multiple approach to calculating the needs of dependants regarding life insurance:
A) is quite straightforward and can be used to calculate the total amount of cover necessary.
B) has an underlying assumption that the needs of all people are very similar.
C) generally ignores the individual's resources and commitments.
D) all of the above.
Q2) a) Outline the principal differences between the measures of speculative risk and pure risk.
b) Justify which of the above measures is more commonly associated with policies of insurance.
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) 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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11
Chapter 10: Superannuation
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70592
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) In the 2015 financial year James has recently turned 53 years of age. He works part-time for a large corporation earning $20,000 p.a. including his employer's contribution under the superannuation guarantee scheme and salary sacrifices 100% of his salary into superannuation. James has just sold an investment property and has an assessable capital gain of $250,000 in the 2015 financial year. What is the maximum tax deduction he can claim for personal superannuation contributions in the current year?
A) $35,000
B) $25,000
C) $15,000
D) $150,000
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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) The deductible amount of a life expectancy income stream purchased for $1 million will:
A) increase with the greater relative age of the purchaser at commencement.
B) decrease with the greater relative age of the purchaser at commencement.
C) increase each year with the increasing age of the purchaser.
D) decrease each year with the increasing age of the purchaser.
Q2) Nadia Seffener, aged 57, immediately withdrew $250,000 from a taxed superannuation fund upon her retirement in May 2014. Nadia's accumulated superannuation balance on retirement has a tax-free component of 30%. Ignoring the Medicare levy, advise Nadia how much tax will be payable.
A) $37,500
B) $11,250
C) $26,250
D) Nil
Q3) In Australia, life expectancy tables published in the last 100 years have shown a:
A) significant rise in average life expectancies.
B) significant fall in average life expectancies.
C) survivorship bias.
D) both a and c
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Page 13
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) 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.
Q2) At a recent SMSF seminar on suitable SMSF investments it was stated by the presenter that SMSF trustees must be careful when undertaking transactions with fund members or related parties that such transactions are conducted on an 'arm's length basis'. What is the meaning of the term 'arm's length basis' and what is its relevance to transactions with fund members or related parties?
Q3) Commercial terms regarding property acquisitions for a SMSF include:
A) acquiring assets on an arms-length basis.
B) paying rentals at above or below market rates.
C) both a and b
D) none of the above.
Q4) The small business retirement exemption:
A) is not subject to indexation.
B) is available to small business owners at least 55 years of age.
C) requires the business to have been held for more than 10 years.
D) all of the above.
Page 14
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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) The deeming of income when assessing eligibility for the age pension under the income test is:
A) applied to all assets of the person.
B) applied to financial assets of the person subject to some exclusions.
C) only applied to some financial assets above a threshold asset level.
D) applied to financial assets of the person subject to some exclusions and uses the higher of the deemed income or actual income returned by these financial assets.
Q2) 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.
Q3) In your opinion, why is the government in the process of changing the eligibility age for the age pension for some applicants?
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) Superannuation death benefits:
A) cannot be paid into the estate of the deceased.
B) can only be paid to a child over 18 and under 25 where they are a financial dependent.
C) may result in different amounts being paid in taxes when distributed to different SIS Act dependants.
D) none of the above.
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) Shares acquired by the deceased before the introduction of the capital gains tax (CGT) will not be subject to CGT if sold by the:
A) executor or the beneficiary.
B) executor within 6 months of the date of death.
C) beneficiary within 12 months of the date of death.
D) none of the above.
Q4) What is the importance of testamentary capacity in the process of making a will?
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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) A limited advice plan:
A) considers all aspects of the client's personal circumstances, needs and objectives. B) is also termed scaled advice.
C) is often sought and requested by clients seeking financial advice on a particular issue or specific circumstances, for example research on a particular product, investigation into negative gearing strategies, or salary packaging. D) both b and c
Q2) Discuss the importance of maintaining security over client records and what levels of internal controls a financial planning firm could maintain to ensure such levels of security.
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.
Q4) 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?
Q5) Discuss the form and extent of remuneration disclosure that applies to financial advisers.
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