BUSI 352 Final Exam | Complete Solutions (Verified)

BUSI 352 Final Exam | Complete Solutions (Verified) A good financial planning report must include an analysis of all the following except: A. where you are now B. where you want to be C. Why you failed previously D. How to reach your goals Usual financial planning goals include the following except: A. retirement funding B. Current lifestyle C. Career planning D. Estate planning A client's formal Financial planning report that summarizes all of the following except: A. strategy - how the client gets where he or she wants B. Turnover - when and how the client will sell certain investments C. Analysis - where the client is now D. Objectives - where the client wants to be All of the following is true regarding the types of financial problems clients will face in their lives? A. taxes add to the cost of an investments and slow progress toward the client's goals B. The inability to quickly turn invested capital into spendable cash is related to inflation C. Clients should not be concerned about leaving to assets to children or young adults D. Psychological comfort has no place in the financial planning process Which of the following is true regarding the contends of the financial plan? A. The length of the presentation of the plan should always be the same, regardless of the contents of the plan B. once the plan is in place it should not be changed C. Checklists are usually a bad idea in the plan D. The plan should have a discussion of how to achieve goals The six steps in the financial management process outlined by the authors include the following except: A. establish goals B. collect data C. measure performance D. establish living wills Which of the following is true regarding risk? A. attitudes towards risk are easy to measure B. Defining the nature of risk is objective for each person C. Attitudes about risk are likely to change over a person's lifetime D. Risk attitudes are due to factors that are relatively easy to deal with Which of the following statements is true regarding financial objectives? A. Good financial objectives are stated in aspirational terms B. All financial objectives have short time horizon C. After they have been identified, they should be prioritized D. Once identified, they do not need to be revisited Which of the following is true regarding developing a financial plan? A. this involves budgeting income and expenses B. if a client needs an emergency fund, no recommendations are needed C. Estimating returns should not be needed D. the planner should guard against projections of the client's expected financial position Which of the following is true regarding a person's standard of living? A. maintaining a person's lifestyle should generally take a minority of a person's resources B. income not allocated to maintain a person's standard of living should be allocated to other financial objectives C. It should be easy to accomplish financial objectives even if almost all a person's income is used to maintain lifestyle D. Every person should spend the same amount of income to maintain lifestyle Which of the following is true regarding financial security? A. financial security is based on absolute wealth or income B. taxes are not a consideration when determining financial security C. a pension plan left by a decedent to a grandchild may retain less than a quarter of its value D. Wealth and income are diverted because of inflation and slippage Which of the following is true regarding taxes? A. high tax brackets indicate planning opportunities B. it is not possible to shift income through gifting C. It is not really possible to save on taxes by deferring income D. It is not possible to transfer wealth through generations' tax free Which of the following is NOT part of the definition of an Investment Advisor as defined by the Investment Advisers Act of 1940 (the Act)? A. provides advice regarding securities B. is in the business of providing advice C. holds a CFP or series 7 license D. receives compensation for advice The Act defines compensation as A. commission only B. fees only C. receipt of any economic benefit D. 12 (b) 1 fees only Which of the following is NOT exempt from the definition of an investment advisor? A. publisher of the local newspaper, the Daily Beagle B. insurance agent who advises clients about no load mutual funds C. Those who advise clients solely about U.S. treasury obligations D. local attorney who occasionally advises clients about setting up investment accounts for their jury awards The "brochure rule" requires that the investment adviser do which of the following? A. provide the client with an audited financial statement of the adviser's net worth B. Deliver a written disclosure document (such as part II of form ADV) to each client C. Provide a part I of form ADV to each client D. provide clients with copies of the adviser's marketing brochure The anti-fraud provisions of the Act applies to: A. all investments advisors, even those who are exempt rom registration B. only those who must register with the SEC or the states C. only situations where security transactions take place D. only advisors of pension plans which of the following statements about the definition of "security" under the investment advisory act is correct? A. the act defines the term "security" in the broadest possible fashion B. the act defines the term narrowly, to include only stocks, bonds and certificates of deposit C. The SEC periodically holds hearings to define the term D. the definition is left to the NASD Financial Advisor John Smith manages investment accounts for clients for mostly in his home state of Ohio. He should register with the Ohio division of securities if: A. he has any clients outside of Ohio B. The assets under his management exceed 30 million C. Assets under his management are less than 25 million D. He is not a CFP certificant All of the following are the disciplinary actions that the CFP Board may take against a financial advisor who is in violation of the Code of Ethics except: A. Private Censure B. Lawsuit against the advisor in Federal Court C. Public letter of admonition D. Suspension Which of the following are PROHIBITED uses of the CFP marks? A. www. CFP B. CFP Advisors, INC. C. All Star CFPs, Inc. D. All of the Above Under the CFP Board's Code of Ethics and Professional Responsibility, a financial planner who has reason to suspect illegal conduct in his or her organization must: A. disclose the information to his or her supervisor B. alert regulatory authorities if the organization does not take suitable to remedy the situation C. not use the process to harass another planner D. all of the above An important requirement that is common to the SEC rules for investment advisors and the CFP Board's Code of Ethics is: A. Full disclosure of all material information to clients B. a ban on accepting commissions C. a ban on "soft dollar" D. rules for custody of assets under management The principle of objectivity in the Code of Ethics and Professional Responsibility of the CFP Board of Standards requires that a CFP practitioner A. must disclose in writing any conflicts of interest that might compromise the adviser's objectivity or independence prior to establishing a relationship with the client B. Had the burden of proving, by clear and strong evidence that any business transactions with or for the client are arms-length transactions C. Must act with prudent professional judgement and in the best interest of the client D. All of the above The CFP Board's Financial Planning Practice Standards are designed to accomplish all of the following except: A. advance professionalism in financial planning B. facilitate the weeding out of incompetent financial advisors C. enhance the value of the financial planning process D. Establish certain norms of practice for CFP practitioners Which of the following uses of the CFP marks are PROHIBITED by the CFP board? A. Jane Smith is a CFP graduate B. Jane Smith is a CFP C. Jane Smith has a CFP D. All of the above Which of the following is true regarding the relationship a planner has with the client? A. the financial planner solely defines the scope of the relationship B. The engagement of the planner is never limited C. the duration of any relationship will always be open-ended D. It is possible that the scope of the relationship will change over time What is true regarding a client, or potential client's, finances? A. a client's life expectancy is not relevant regarding the determination of a client's financial goals B. The planner should consider the likelihood of the client reaching recommended financial objectives C. How a planner acts towards the client has no effect on the public's attitude toward planners D. assumptions should not be made about a client when reviewing the client's finances A financial planning professional must do all of the following with the client, except: A. prove to the client why taking more risk is needed B. explain what should be done and why C. discuss the viable alternatives to the client D. explain why present arrangements don't accomplish client's objectives Which member of the financial planning team should be considered the most important? A. CPA B. Client C. Life insurance professional D. Tax attorney Which of the following organizations administers the exam that leads to the CFP certification? A. The American college B. The financial planning association C. The CFP Board of Standards D. The college for financial planning Retirees may be sensitive to which of the following uncontrollable factors which may deplete their funds? A. living too long B. an inheritance to leave to their family C. loneliness D. carefree spending Which of the following is true regarding financial issues facing widows or widowers? A. they are usually very logical when it comes to managing finances B. many have a great deal of experience in managing money C. while sad at the loss of a spouse, young widows quickly look forward to possibly meeting a new life partner D. they face many issues that face retirees and divorces which of the following is true regarding financial issues facing young parents? A. young parents usually put off financing a college fund for the children B. these individuals usually have more than enough time to save for retirement C. Housing is usually a major financial issue facing these couples D. life insurance is not needed at this stage of life which of the following statements is true regarding financial behavior? A. financial issues do not affect other parts of a person's life B. only a small number of people have assets that exceed their needs C. divorced individuals are usually looking forward to meeting a new life partner D. young single people typically are very good about saving for retirement Which of the following is true regarding lifestyle choices? A. there is no right or wrong answer regarding what lifestyle is appropriate B. Fixed required expenses lave a client with no options C. a person's background experience will have no effect on their lifestyle choices D. Discretionary expenses tend to be rather minor expenses The financial aspects of a person's lifestyle are determined by all the following EXCEPT: A. how much the person wants to spend to maintain the lifestyle B. the financial priorities the person has C. The Financial resources the person has D. the personality of their financial planner Which of the following is generally NOT one of the basic goals of financial planning? A. children's education B. Parental issues C. Divorce D. estate planning Which of the following is true regarding discretionary expenses? A. vacations are generally not a major discretionary expense B. season tickets to professional teams can be a major expense C. These expenses should be decided on before discussing fixed expenses D. resources have no effect on discretionary spending Which of the following should be done if divorce is inevitable A. change beneficiary designations for retirement plans B. maintain joint checking accounts C. do what is needed to make sure one spouse stays in the house D. establish new joint credit cards which of the following is true regarding same-sex married couples? A. these couples' legal rights are straightforward B. they are allowed to file joint federal tax returns C. a surviving partner generally has no intestacy rights D. the estate tax marital deduction is generally unavailable Which of the following is true regarding a person's employment situation? A. overtime should not be considered when determining the compensation package B. company loyalty is different now than it was in the past C. the decision to change jobs would not need to be discussed with a financial planner D. taxes would have no impact on a decision on whether or not to change jobs The following statements about "529 plans" for funding college educational expenses are true EXCEPT: A. withdrawals from 529 plans for qualified educational expenses are tax-free B. parents can retain some control over the funds, including the ability to change beneficiaries C. contributions are not eligible for federal income tax deduction D. donor can exercise day to day control over investment management The following features of an UTMA account set up in a child's name by a parent to pay for the child's college education are true EXCEPT: A. the parent loses control of the account when the child reaches the age of majority (18 or 21, depending upon the state) B. the child may qualify for less financial aid in college C. investment income is generally taxable to the parent until the child is 24 years old D. if child chooses not to go to college, the parent can revoke the account All of the following factors need to be considered in assessing the adequacy of funds needed to fund a client's income needs during retirement EXCEPT: A. inflation B. investment returns C. spending levels D. living trust funds which of the following is true about retirement planning? A. social security benefits start at age 55 B. retirement planning should start about five years before retirement C. retirement planning is really about cash-flow planning D. the average savings rate in the U.S. is 15% Which of the following is true regarding inflation? A. advances in technology make everything more affordable B. inflation impacts retirees differently than those who are working C. assumptions about inflation are generally easy to make D. clients do not need to worry about volatility in inflation the most important documents that a terminally ill person should have are the following EXCEPT: A. healthcare power of attorney B. Living will C. power of attorney/durable power of attorney D. Charitable remainder trust The probate process ensures the following except: A. court scrutiny of the executor's actions B. No contesting of the will by any beneficiaries or potential beneficiaries C. payment of debts, taxes, etc. from the estate D. bequests to beneficiaries according to the terms of the will the following statements about a person dying without a will are true except: A. it is called dying "Intestate" B. Beneficiaries who are not blood relatives of decedent may be disinherited C. the probate court will divide the estate based on petitions from potential beneficiaries D. the probate court will appoint someone to oversee the estate the ability of spouses to treat gifts as by each spouse so as to double the use of the gift tax annual exclusion is called which of the following? A. gift splitting B. marital deduction C. unified credit D. joint tenancy which of the following is NOT a requirement for a valid will? A. it must be signed and dated at the end B. the writer must have reached a certain age C. witnesses must sign the will D. the will must be typed which of the following is true about modifying or revoking a will? A. state laws will sometimes revoke or modify a will based on certain events happening B. defacing a will has no effect on its validity C. an amendment to a will can never result in the will's revocation D. A divorce will always cause the former spouse to not be allowed to take under the will Individuals with only self-employment income can receive credit with social security Social security based on: A. the number of hours worker in a given quarter B. the amount of self-employment income reported in a given quarter C. the amount of tax liability incurred in a given quarter D. all of the above A person is fully insured for life if he or she has at least _______ quarters of coverage A. 20 B. 30 C. 40 D. 100 The Medicare Part that may be contracted out of private insurers is: A. Part A B. Part B C. Part C D. none of the above Medicaid is administrated: A. by the Social Security Administration B. by the Department of Health and Human Services C. by individual states D. jointly by the federal government and states Which of the following represents both the age after which an individual may no longer establish a non-rollover traditional IRA and the trigger point for beginning required distributions? A. 65 B. 70 1/2 C. 72 1/2 D. 75 For individuals who have attained age 50 before the close of the tax year, what is the maximum dollar amount that may be contributed to a traditional IRA in 2018? A. $3,000 B. $4,000 C. $5,500 D. $6,500