Wealth Management Exam Review
Course Introduction
Wealth Management is a comprehensive course designed to equip students with the knowledge and skills required to effectively manage personal and institutional wealth. The course explores key concepts such as investment strategies, portfolio construction, risk assessment, tax planning, estate planning, and retirement planning. Students learn how to analyze client needs, develop tailored financial plans, and understand the legal and ethical considerations in the wealth management industry. Through case studies and practical exercises, the course also emphasizes the importance of client relationship management and the use of technology in modern wealth management practices.
Recommended Textbook
Financial Planning 2nd Edition by Warren McKeown
Available Study Resources on Quizplus
15 Chapters
443 Verified Questions
443 Flashcards
Source URL: https://quizplus.com/study-set/3555
Page 2
Chapter 1: Personal Financial Planning
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70601
Sample Questions
Q1) The lowest level of business activity occurs during which of the following phases in the business cycle?
A) boom or expansion phase
B) recession phase
C) recovery phase
D) contraction phase
Answer: B
Q2) A close reading of chapter 1 provides which of the following lessons for investors:
A) be aware of market cycles
B) do not diversify unless there are no other options available
C) both a and b
D) none of the above
Answer: A
Q3) A managed fund investing in subprime mortgages will be holding assets of:
A) low quality with a low possibility of default by borrowers
B) low quality with a high possibility of default by borrowers
C) high quality with a low possibility of default by borrowers
D) high quality with a high possibility of default by borrowers
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Financial Planning Skills
Available Study Resources on Quizplus for this Chatper
31 Verified Questions
31 Flashcards
Source URL: https://quizplus.com/quiz/70600
Sample Questions
Q1) The greater the initial investment the:
A) greater the future value at a given interest rate and given number of periods.
B) lower the future value at a given interest rate and given number of periods.
C) future value will be the same at a given interest rate and given number of periods.
D) none of the above.
Answer: A
Q2) Credit card facilities in Australia are currently characterised by:
A) providing borrowers with an open-ended credit facility.
B) borrowers being required to make a monthly payment based on the outstanding credit card balance.
C) providing lenders in recent years with a higher source of fee revenue from this source than from home loans.
D) all of the above.
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Taxation Planning
Available Study Resources on Quizplus for this Chatper
26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/70599
Sample Questions
Q1) 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
Q2) The Australian company income tax rate is:
A) 10%
B) 15%
C) 30%
D) none of the above
Answer: C
Q3) Examples of income tax offsets in Australia include:
A) subscriptions to professional journals.
B) imputation or franked credits.
C) interest on loans used for investment purposes.
D) all of the above.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Investment Choices
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70598
Sample Questions
Q1) The relative investment performance of the major asset classes in the last 10 and 20 years as included in the text shows:
A) Australian shares to have underperformed listed property.
B) Australian bonds to have underperformed listed property.
C) hedged international shares to have outperformed unhedged international shares. D) all of the above.
Q2) The expected return on a portfolio is calculated as the:
A) average return of individual shares in the portfolio, as a fraction of the number of individual shares in the total portfolio.
B) weighted average return of individual shares in the portfolio, weighted by the risk of each share forming part of the total portfolio.
C) weighted average return of individual shares in the portfolio, weighted by the fraction of the total portfolio invested in each share.
D) none of the above.
Q3) Briefly explain the effect of a multiple asset class portfolio as reported by Gibson (2000).
Q4) How does diversification reduce risk?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Direct Investment Fixed Interest and Shares
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70597
Sample Questions
Q1) 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.
Q2) The ASX Trade platform facilitates share trading in Australia based on:
A) time-price priority.
B) price-volume priority.
C) price-time priority.
D) none of the above.
Q3) Briefly explain how lenders use the cash rate when setting interest rates.
Q4) An example of an issue of a financial security in the primary market would be:
A) the acquisition of shares in a company from an existing investor purchased on the ASX.
B) shares arising as a result of a dividend reinvestment plan.
C) shares arising from participating in a rights issue.
D) both b and c
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Direct Investment - Property
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70596
Sample Questions
Q1) 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.
Q2) The income to be declared in the income tax return which relates to property investment consists of the gross rental income from the tenant. The deductions that can offset the income include:
A) interest on the loan taken out to purchase the property.
B) a portion of the set-up costs of borrowing the funds which are allowed to be deducted over a 3-year period.
C) a capital depreciation allowance of 4.0% of the cost of the building is allowable for 40 years.
D) a capital expense such as the addition of an air conditioner to the property.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Managed Funds
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70595
Sample Questions
Q1) 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.
Q2) Calculate the unit price of the Masterproc Balanced Fund ("Masterproc ") using the following information extracted from its latest financial statements including the detail that it had 63 million units on issue at the end of the latest financial year:
\(\begin{array} { l c c }
& \text { Book Value } & \text { Market Value } \\
{ \text { Details } } & \text { \$ million } & \text { \$ million } \\
\text { Cash and deposits }& 25 & 28 \\
\text { Bonds } & 66 & 59 \\
\text { Equities }& 135 & 296 \\
\text { Property } & 100 & 112 \\
\text { Trade Creditors } & 45 & 45 \\
\text { Mortgage Loans }& 167 & 167
\end{array}\)
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Leveraged Investments
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70594
Sample Questions
Q1) Briefly discuss the principal benefits of undertaking gearing as an investment strategy.
Q2) Briefly discuss the options available to a futures trader holding an 'open' position on a futures contract.
Q3) When an investor invests in an income producing asset:
A) interest on any loans associated with the income producing asset are tax deductible
B) interest is not a tax deductible expense
C) interest may be deducted from the income derived from an income producing to the extent of the level of income less any other associated expenses
D) none of the above
Q4) If an investor believes that the price of an asset is going to decrease in the future they would:
A) prefer to currently own the asset and hold
B) prefer not to currently own the asset if they are long-term investor
C) prefer to sell the asset if currently held
D) both b and c
Q5) Briefly discuss the value of the tax shield for a negatively geared property investment.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Risk Management and Insurance
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70593
Sample Questions
Q1) 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.
Q2) Benefit payments from an income protection policy will generally be:
A) reduced by any sick leave or compensation payments received by the insured during the claim period.
B) unaffected by any sick-leave or compensation payments received by the insured during the claim period.
C) increased by any investment income earned during the claim period.
D) none of the above.
Q3) Methods of minimising insurance premiums from the insurer's perspective include:
A) reducing the average risk profile of new entrant.
B) increasing the average risk profile of new entrant.
C) reducing the total number of entrants.
D) both a and c
Q4) 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.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Superannuation
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70592
Sample Questions
Q1) A superannuation fund with all members in accumulation mode receiving its taxable earnings in the current year of income in the form of interest on investments and fully franked dividends at the company tax rate of 30% on shares will have:
A) greater gross cash earnings than its assessable income.
B) greater assessable income than its gross cash earnings.
C) gross cash earnings equal to its assessable income.
D) either a or c
Q2) Despite increases in longevity, there is a trend towards earlier retirement than that which has traditionally occurred. Given the adverse financial consequences for government that this is likely to produce, what changes has the government made in more recent times in order to encourage people to continue accumulating retirement savings, particularly from continuing to work, for periods longer than otherwise?
Q3) An underfunded defined benefit superannuation scheme is most likely to present adverse financial outcomes for which of the following parties?
A) The employer.
B) The superannuation fund member.
C) The fund actuary.
D) None of the above.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Retirement Planning
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70591
Sample Questions
Q1) In general, for a lump sum withdrawal of untaxed superannuation money:
A) taxes will be greater than that for taxed superannuation money.
B) taxes will be lower than that for taxed superannuation money.
C) taxes will be the same as that for taxed superannuation money.
D) either b or c
Q2) 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
Q3) 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.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Self-Managed Superannuation Funds
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70590
Sample Questions
Q1) A SMSF will be more readily able to meet its liquidity requirements if it invests in which one of the following investment portfolio allocations?
A) Growth-only assets.
B) 75% growth assets and 25% income assets.
C) 50% growth assets and 50% income assets.
D) 25% growth assets and 75% income assets.
Q2) The residency status of a SMSF will not be jeopardised where the trustees:
A) travel overseas for no more than 30 months before returning for at least 28 days. B) travel overseas for no more than 24 months before returning for at least 14 days. C) travel overseas for no more than 24 months before returning for at least 28 days.
D) none of the above.
Q3) 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?
Q4) Why are there likely economies of scale in operating a SMSF?
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Social Security
Available Study Resources on Quizplus for this Chatper
29 Verified Questions
29 Flashcards
Source URL: https://quizplus.com/quiz/70589
Sample Questions
Q1) Superannuation assets for social security applicants are counted towards the assets test:
A) and income is deemed under the deeming rules until the applicant reaches pension age.
B) and income is deemed under the deeming rules once the applicant reaches pension age.
C) but income will not be deemed under the deeming rules until the applicant reaches pension age.
D) but income will not be deemed under the deeming rules once the applicant reaches pension age.
Q2) The general asset valuation methodology used for assessing eligibility for government benefits and allowances under the assets test is:
A) net market value.
B) fair market value.
C) fair market value less debts owing on the asset.
D) both a and c
Q3) On what basis do you consider that some assets are allocated as fully assessable, partly assessable or exempt from the pension assets test?
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Estate Planning
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70588
Sample Questions
Q1) Briefly explain the differences between a testamentary trust and an inter vivos trust.
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 person with the ultimate control over a living trust is the:
A) settlor.
B) trustee(s).
C) beneficiary(ies) must settle the trust with a cash sum of at least $100.
D) none of the above.
Q4) Differentiate between estate and non-estate assets and include examples of each type.
Q5) In the context of this chapter, the term 'TFM' refers to which of the following?
A) Testator's family maintenance.
B) Trusts for minors.
C) Trusts for females and males.
D) None of the above.
Q6) Briefly discuss the circumstances in which a power of attorney can be cancelled.
Page 16
To view all questions and flashcards with answers, click on the resource link above.
Chapter 15: Development of a Statement of Advice
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/70587
Sample Questions
Q1) The legislation that specifically sets out how organisations should collect, use, keep secure and disclose personal information is the:
A) Corporations Act.
B) Privacy Act.
C) Income Tax Assessment Act.
D) none of the above.
Q2) A sunset clause in a SOA represents:
A) the date beyond which the provided recommendations will no longer remain valid.
B) a period during which further investments can be placed at a reduced transaction fee.
C) the maximum period after which the financial planner cannot be sued for negligent advice by the client.
D) an acknowledgement by the financial planner that they have the necessary licence to operate in this capacity.
Q3) 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?
To view all questions and flashcards with answers, click on the resource link above.