Retirement Planning Exam Review
Course Introduction
Retirement Planning is a comprehensive course designed to equip students with the knowledge and tools required to effectively plan for financial security in retirement. The course covers essential concepts such as retirement needs analysis, pension and social security benefits, employer-sponsored plans, IRAs, investment strategies, tax implications, insurance, and estate planning. Students learn how to evaluate various retirement vehicles, assess personal risk tolerance, and create tailored savings plans to help achieve long-term financial goals. Case studies and real-life scenarios are used to develop practical skills in retirement planning, making this course valuable for future financial professionals and individuals preparing for their own retirement.
Recommended Textbook
Personal Financial Planning 1st Edition by Lewis Altfest
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20 Chapters
651 Verified Questions
651 Flashcards
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Chapter 1: Introduction to PFP
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32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/70125
Sample Questions
Q1) Which of the following is not a finance tool?
A) Time value of money
B) Cash flow analysis
C) Investment models of behavior
D) Optimization
E) All of the above are finance tools
Answer: E
Q2) What factor explains expanded financial planning services in the 1970s?
A) A middle class with increased discretionary income.
B) The growing complexity of financial instruments and services.
C) Personal financial planning developing as a profession.
D) Magazines and other media that increased awareness of personal finance issues.
E) All of the above.
Answer: E
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3
Chapter 2: Time Value of Money
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35 Verified Questions
35 Flashcards
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Sample Questions
Q1) If the value of the principal today is $17,567 and the interest rate is 0.93%, what is the total simple interest income at the end of fifteen years?
A) $17,567
B) $2,540.60
C) $82,765.65
D) $300.56
E) None of the above.
Answer: B
Q2) What is the internal rate of return?
A) The discount rate that makes the cash inflows equal to the cash outflows.
B) The discount rate that the firm uses to calculate the profit margin.
C) The discount rate after adjusting for inflation.
D) The difference between nominal and real returns.
E) None of the above.
Answer: A
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4
Chapter 3: Beginning the Planning Process
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34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/70112
Sample Questions
Q1) For which type of planning do we require current projected income and expenses?
A) Income tax planning.
B) Cash flow planning.
C) Estate planning.
D) Specialized planning.
E) None of the above.
Answer: B
Q2) Behavioral finance can best be defined as:
A) How to improve people's decision-making abilities so that they can more easily achieve the goals they set.
B) The study of human actions in financial matters.
C) How to understand people's decision-making abilities so that they can more easily achieve the goals they set.
D) The study of how behavior is shaped by an individual's financial well-being.
E) None of the above.
Answer: B
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Chapter 4: Household Finance
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34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/70111
Sample Questions
Q1) What does a household represent?
A) An organizational structure that unites its occupants.
B) A structure with a form that affects a business.
C) The combined financial actions of a family.
D) Logical decision making by a family.
E) None of the above.
Q2) How do people select goods and services from those made available in the marketplace?
A) By grouping goods and services into consumption bundles and ranking the bundles in order of attractiveness.
B) By ranking goods and services in order of attractiveness, and then using these rankings to form consumption bundles.
C) By ranking goods and services into consumption bundles and ranking the bundles in order of price.
D) By ranking goods and services into consumption bundles and ranking the bundles in order of satisfaction.
E) By ranking goods and services in order of price, and then using these rankings to form consumption bundles.
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6
Chapter 5: Financial Statements Analysis
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32 Verified Questions
32 Flashcards
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Sample Questions
Q1) For which of the following operating activities is the rate of inflation not commonly used for projections?
A) Food.
B) Clothing.
C) Alimony.
D) Hobbies.
E) Charitable contributions.
Q2) What are pro forma statements?
A) Functional cash statements that were converted from traditional cash flow statements.
B) Statements that do not include projections.
C) Statements that include projections.
D) Traditional cash statements that were converted from functional cash flow statements.
E) None of the above.
Q3) How are each of the following items recorded according to GAAP business?
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Chapter 6: Cash Flow Planning
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32 Verified Questions
32 Flashcards
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Sample Questions
Q1) Which of the following is not a recommended solution if the comparison of projected cash flows with goals identifies a shortfall?
A) Find additional income.
B) Utilize the emergency fund.
C) Cut back costs.
D) Change goals.
E) All of the above are recommended solutions.
Q2) Which of the following is not a goal of cash flow planning?
A) Reducing tax liability.
B) Planning for retirement.
C) Paying off credit card debt.
D) Eliminating risk.
E) All of the above are goals of cash flow planning.
Q3) What is the gross savings percentage?
A) (new cash flow + total income + change in debt)/targeted savings.
B) (new cash flow + targeted savings + change in debt)/total income.
C) (total income + targeted savings + change in debt)/new cash flow.
D) (new cash flow + targeted savings + total income)/change in debt.
E) None of the above.
Q4) Please list and describe eight different reasons for savings.
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Chapter 7: Debt
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35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/70108
Sample Questions
Q1) Which of the following is not a characteristic of debt?
A) It may make it possible to balance the peaks and valleys in one's spending pattern.
B) It does not help one even out life cycle style needs.
C) It allows an outlay for a significant capital expenditure.
D) All of the above are characteristics of debt.
E) None of the above are characteristics of debt.
Q2) Which of the following types of borrowers are constantly seeking more funds and may have to take any payment terms offered?
A) Unrational borrowers.
B) Rational borrowers.
C) Discrete borrowers.
D) Surplus borrowers.
E) None of the above.
Q3) What are the advantages and disadvantages associated with fixed rate and variable rate mortgages?
Q4) For each of the following types of debt, please indicate whether the debt is (a) tax deductible and (b) secured.
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9
Chapter 8: Non Financial Investments
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33 Verified Questions
33 Flashcards
Source URL: https://quizplus.com/quiz/70107
Sample Questions
Q1) Which of the following factors makes auto leasing less attractive than ownership?
A) Selling an automobile is time-costly.
B) Inspection standards.
C) Mileage charges.
D) Both a and b.
E) Both b and c.
Q2) Which of the following durable goods is discretionary?
A) Sports.
B) Traveling.
C) Childcare.
D) Both a and b.
E) Both b and c.
Q3) Which of the following is never used as an alternative name for real assets?
A) Tangible assets.
B) Physical assets.
C) Hard assets.
D) All of the above are alternative names.
E) Only a and c are alternative names.
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Chapter 9: Financial Investments
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32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/70106
Sample Questions
Q1) Which of the following time frames is associated with a long-term horizon?
A) 2-7.
B) 10-20.
C) 2-4.
D) 4-10.
E) 15-35.
Q2) What is the risk premium?
A) The extra risk that compensates you for the additional amount of return you are taking with a particular security over a completely safe one.
B) The extra return that compensates you for the additional amount of risk you are taking with a particular security over a completely safe one.
C) The extra risk that compensates you for the additional amount of return you are taking with a particular security over the market return.
D) The extra return that compensates you for the additional amount of risk you are taking with a particular security over the market risk.
E) None of the above.
Q3) Please list and explain nine strengths associated with mutual funds.
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11
Chapter 10: Risk Management
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32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/70124
Sample Questions
Q1) In practice, we can view risk as:
A) The probability of a loss or an outcome that is below expectations.
B) The inability to hedge a loss or an outcome that is below expectations.
C) The probability that more outcomes are below expectations than above expectations.
D) All of the above.
E) None of the above.
Q2) Which of the following insurance categories provides coverage that makes payments to replace income of the insured once the person is incapacitated?
A) Life.
B) Long term care.
C) Health.
D) Disability.
E) None of the above.
Q3) Which of the following is not a major type of life insurance?
A) Term
B) Whole life
C) Universal life
D) Variable life
E) Variable term life.
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Page 12
Chapter 11: Other Insurance
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31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70123
Sample Questions
Q1) Modified no-fault insurance:
A) May use the traditional tort system for cases that are not as involved and revert to no-fault for serious injuries or death.
B) May use no-fault for cases that are not as involved and revert to the traditional tort system for serious injuries or death.
C) May allow the insurance company to decide whether to use no-fault or the traditional tort system.
D) May allow the policy holder to decide whether to use no-fault or the traditional tort system.
E) None of the above.
Q2) Coverage of losses to you or your property directly is called:
A) First-party coverage.
B) Second-party coverage.
C) Third-party coverage.
D) Fourth-party coverage.
E) None of the above.
Q3) Please list the type of dwelling and type of coverage associated with the eight types of homeowner's policies.
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Chapter 12: Retirement Planning
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) Which of the following is not a strategy through which a retiree can control inflation risk?
A) Owning a home that one is willing to liquidate.
B) Make inflation assumptions that are at the high end of the range.
C) Substantive concentrations in stocks.
D) Inflation-indexed bonds.
E) All of the above are strategies through which a retiree can control inflation risk.
Q2) For each of the following competing instruments, compare the advantages of an annuity and the advantages of the competing instrument.
(a) CD
(b) Taxable Bond
(c) Municipal Bond
Q3) Which of the following is not type of risk associated with planning for retirement?
A) Investment risk.
B) Inflation risk.
C) Longevity risk.
D) Health risk.
E) All of the above are types of risk associated with planning for retirement.
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14
Chapter 13: Educational Planning
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31 Flashcards
Source URL: https://quizplus.com/quiz/70121
Sample Questions
Q1) Which of the following is not a topic that should be discussed to assist clients in financial literacy in the area of debt?
A) The appropriate use of borrowed funds.
B) How to get out of debt.
C) Establishing a formal or informal family budget.
D) What is the best source of credit?
E) All of the above should be discussed to assist clients in financial literacy in the area of debt.
Q2) Can funds in a Section 529 plan be used to attend a foreign school?
A) No.
B) Yes.
C) Yes, if the foreign schools can participate in the Department of Education's student aid program.
D) Yes, unless the foreign schools can participate in the Department of Education's student aid program.
E) None of the above.
Q3) Please list and explain seven basic financial literacy principles.
Q4) For each of the following areas, please list important topics that should be discussed to help client's become financial literate:
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Chapter 14: Tax Planning
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34 Verified Questions
34 Flashcards
Source URL: https://quizplus.com/quiz/70120
Sample Questions
Q1) For each of the following areas of the financial plan, please provide an example of the tax impact.
(a) Cash Flow Planning.
(b) Investments.
(c) Financing.
(d) Risk Management.
(e) Retirement Planning.
(F) Estate Planning.
Q2) Lucy expects taxable revenues of $68,000 in the current year. Her adjustments to revenues are projected to be $3,000 this year. Her deductions and exemptions are projected at $23,000. There is no state income tax where Lucy resides. What is her federal tax under an assumed 20% average tax bracket?
A) $7,300.
B) $8,400.
C) $9,500.
D) $10,600.
E) None of the above.
Q3) Please detail the principal components of the tax return.
Q4) Please list and explain eight tax planning strategies.
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Chapter 15: Estate Planning
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32 Verified Questions
32 Flashcards
Source URL: https://quizplus.com/quiz/70119
Sample Questions
Q1) Which of the following is not a tax assessment that must be taken into consideration during estate planning?
A) Gift.
B) Estate.
C) Probate.
D) Income.
E) All of the above must be taken into consideration.
Q2) For each of the following estate planning tools, provide details regarding their characteristics, material tax advantages, principal advantages, and principal disadvantages.
Q3) Which of the following does not take effect until a specific event stated in the document?
A) Durable power of attorney.
B) Medical power of attorney.
C) Springing power of attorney.
D) All of the above.
E) None of the above.
Q4) What are the fourteen steps of estate planning?
Q5) Please list and describe eight factors for which a legally recognized will should be evaluated.
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Chapter 16: Stocks, Bonds and Mutual Funds
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33 Verified Questions
33 Flashcards
Source URL: https://quizplus.com/quiz/70118
Sample Questions
Q1) The relationship that exists between bond maturity and risk can be explained through observing that:
A) The longer the period, the greater the potential for a change in the ability of a company to repay its debt.
B) A broad-based change in interest rates will have a greater effect on long-term bonds.
C) The shorter the period, the greater the potential for a change in the ability of a company to repay its debt.
D) Both a and b.
E) Both b and c.
Q2) If the annual coupon is $2,243.5, the face value $100,000, the market price $124,345.43, and the number of years to maturity 23.76, what is the approximate yield to maturity?
A) 0.42%
B) 1.42%
C) 2.42%
D) 24.42%
E) None of the above.
Q3) List and provide a detailed explanation for nine types of bond funds.
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Chapter 17: Background Topics
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Sample Questions
Q1) What is a fiduciary?
A) An officer of the law.
B) A trusted party who acts as an agent for another person.
C) A lawyer designated by the courts.
D) All of the above.
E) None of the above.
Q2) Which period of time is associated with the longest expansion in the U.S. economy between 1945 and 2001?
A) November 1973-March 1985.
B) July 1981-November 1994.
C) March 1991-March 2001.
D) Both a and b.
E) None of the above.
Q3) The measure of overall U.S. economic activity produced by U.S. businesses is the:
A) Gross Domestic Product.
B) Gross National Product.
C) Net Domestic Product.
D) Net National Product.
E) None of the above.
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Page 19
Chapter 18: Capital Needs Analysis
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Sample Questions
Q1) Which of the following is an advantage associated with being more conservative in one's simple capital needs projections?
A) You have no benchmark to determine how much to alter each calculation.
B) Errors associated with this approach will not change one's lifestyle.
C) It is easy to understand and to execute.
D) Both a and b.
E) Both b and c.
Q2) Can Total Portfolio Management be used to determine asset selection alone?
A) Yes.
B) No.
C) Only when assets and liabilities are correlated.
D) Only when assets and liabilities are not correlated.
E) None of the above.
Q3) Which of the following is a disadvantage associated with using Monte Carlo simulation?
A) Overly precise calculations.
B) People prefer one clear figure to probabilities.
C) Effectively represents a "guesstimated" risk- adjusted approach.
D) Assumes that the key factors are correlated with each other.
E) All of the above are disadvantages.
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Chapter 19: Behavioral Financial Planning
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31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70115
Sample Questions
Q1) Which of the following best explains why life planning belongs under our definition of behavioral finance?
A) It deals with human actions that deviate from the financial goal of making as much money as possible.
B) It deals with human actions that do not deviate from the financial goal of making as much money as possible.
C) Because behavior is strongly influenced by life experience.
D) Both a and c.
E) Both b and c.
Q2) Why is knowledge of actual human behavior arguably more important for Personal Financial Planning (PFP) than for any other area of finance?
A) Due to PFP's closeness to human actions.
B) Due to PFP's emphasis on practicality.
C) Due to the irrational nature of most personal finance decisions.
D) Both a and b.
E) Both b and c.
Q3) Please list and discuss seven methods that are helpful for maintaining control to achieve planned savings.
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21
Chapter 20: Completing the Process
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Sample Questions
Q1) Total portfolio management's optimization model has as its payoff the asset-liability mix providing the highest return possible. This return figure is:
A) The maximum amount that can be outlaid for discretionary items.
B) The minimum amount that can be outlaid for discretionary items.
C) The maximum amount that can be outlaid for nondiscretionary items.
D) The minimum amount that can be outlaid for nondiscretionary items.
E) None of the above.
Q2) Which of the following best describes integration in the context of personal financial planning?
A) Evaluating costs and benefits over time to find the best path to our goals.
B) Incorporating all members of the household into investment decision making.
C) Thoroughly diversifying investments geographically.
D) Updating the personal financial plan on a periodic basis.
E) None of the above.
Q3) Please list 8 distinguishing features of personal financial planning theory, and describe the benefit of each.
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