Busi 352 Financial Planning - Multiple Choice Ch. 1-7 Exam With Correct Actual Questions And Correctly Well Defined Answers.

Raven recently came to your office for her second appointment after receiving your engagement letter. During the meeting you collect several documents from her including her prior year tax returns, estate planning documents, and investment statements and history. You also worked with her on identifying and prioritizing her goals and objectives. Which of the following is the next step in the financial planning process? a. Presenting the financial planning recommendations. b. Analyzing the client's current course of action and potential alternative courses of action. c. Implementing the financial planning recommendations. d. Developing the financial planning recommendations. - correct answer b Your client, Jed, engaged you to help him with his financial situation. During the course of your meetings you sold Jed a $1,000,000 life insurance policy. Which part of the financial planning process were you engaged in? a. Analyzing the client's current course of action and potential alternative courses of action. b. Monitoring progress and updating. c. Developing the financial planning recommendations. d. Implementing the financial planning recommendations. - correct answer d After meeting with your new client, Nala, you used a Monte Carlo simulation within your financial planning software to project the likelihood of meeting her retirement objective based on her current retirement plan contributions and investment portfolio allocation. Which part of the financial planning process were you engaged in? a. Monitoring progress and updating. b. Implementing the financial planning recommendations. c. Analyzing the client's current course of action and potential alternative courses of action. d. Developing the financial planning recommendations. - correct answer c Thalmus, a local CFP® practitioner, recently met with one of his new clients, Merrell. During the course of the meeting Thalmus did the following things: 1. Thalmus did not meet with Merrell until 10 minutes after the scheduled start time. 2. In order to establish Merrell's confidence in him, Thalmus told Merrell the names of several well known clients that currently do business with him. 3. Thalmus asked Merrell several questions regarding Merrell's family situation, hobbies, and activities. Which of these actions would be considered inappropriate? a. 3 only. b. 1 and 2. c. 2 and 3. d. 1, 2 and 3. - correct answer b Reverend Lola Pak, a prospective client, came to your office for the first time today. Which is the most appropriate way to greet her? a. "Welcome to my office." b. "Welcome to my office, Ms. Pak." c. "Welcome to my office, Reverend Pak." d. "Welcome to my office, Lola." - correct answer b Which of the following is (are) consistent with the Humanistic Paradigm? 1. The majority of Humanistic theories view clients as experts on themselves. 2. The alliance between the counselor and client is extremely important for humanistic counselors and is the basis of the treatment or plan of action. 3. There needs to be a professional distance between the client and adviser where the adviser should stay close to discussing numbers and data with the client. a. 1 only. b. 1 and 2. c. 1 and 3. d. All of the above. - correct answer b Which of the following is NOT a premise in Traditional Finance? a. Markets are Efficient. b. Investors are Rational. c. Markets are Inefficient. d. The Mean-Variance Portfolio Theory Governs. - correct answer c Which of the following are important in nonverbal communication and behavior? 1. Body positioning. 2. Body movement. 3. Voice tone. 4. Voice pitch. a. 1 only. b. 1 and 2. c. 1 and 3. d. All of the above - correct answer d Which of the following investors would apply in the realm of Behavioral Finance? a. A rational investor who considers his or her portfolio as a whole at all times. b. An investor not moved by emotion or biases. c. An investor who at times is subject to emotion or cognitive biases. d. An investor guided by risk calculations based on Beta alone. - correct answer c Which of the following choices is false as to open or closed questions? a. Open or closed questions are both effective tools for the financial adviser. b. An open question starts with the phrase "Isn't it true that ..." c. A closed question is narrow and can be answered with a word or two. d. A closed question seeks a response that is very specific. - correct answer b Kiara is 30 years old and single. She is healthy, has no children or pets. Kiara works as a human resources coordinator and earns approximately $40,000 per year. Due to her outstanding student loans, she has a fairly low net worth. She rents an apartment but does own her car outright. All of the following are likely insurance coverage needs, except? a. Life Insurance. b. Health Insurance. c. Disability Insurance. d. Liability Insurance. - correct answer a Your new client, Payton, age 35, came into your office today. She provided you with the following information for the year: • Income - $100,000 • Taxes - $18,000 • Rent - $14,000 • Living Expenses - $40,000 • Credit Card Debt - $12,000 • Savings - $5,000 • Student Loan Payments - $5,000 • Car Payment - $6,000 After receiving this information you created a pie chart to visually depict where her income was spent. Utilizing targeted benchmarks which of the following statements are you most likely to make during you next meeting? a. "You are spending too much on housing." b. "Your current living expenses are within the normal range." c. "Your mortgage and debt payments are within the normal range." d. "Your savings is low but still appropriate for your age - correct answer c Which of the following is true? a. Debt ratios measure the ability to meet short-term obligations. b. Liquidity ratios indicate how well a client manages debt. c. Ratios for financial security determine the progress that the client is making toward achieving short-term financial security goals. d. Performance ratios determine the adequacy of returns on investments. - correct answer d 4. Utilizing investment assets to gross pay benchmarks, which of the following individuals is likely on target with their investment assets? a. Ross, age 55, earns $150,000 a year and has invested assets of $900,000. b. Rachel, age 35, earns $30,000 a year and has invested assets of $15,000. c. Monica, age 45, earns $60,000 a year and has invested assets of $150,000. d. Joey, age 25, earns $40,000 a year and has invested assets of $9,000. - correct answer d Utilizing the three panel approach, which of the following would be evaluated in Panel 1 - Risk Management? a. Emergency Fund. b. Education Fund. c. Retirement Fund. d. Life Insurance - correct answer d Your client, Meg, asked you several questions about her balance sheet. She doesn't understand how the assets, liabilities and net worth are related. Which of the following statements is true? a. Net Worth = Assets + Liabilities. b. Assets = Net Worth - Liabilities. c. Liabilities = Assets - Net Worth. d. A balance sheet reflects how the assets, liabilities, and net worth changed over the year - correct answer c Which of the following statements concerning the valuation of assets on the balance sheet is correct? a. Since a financial planner has access to all of the client financials, a privately-held small business is easier to value than a publicly traded company. b. Assets should be valued on the balance sheet using replacement cost. c. An actuary should be retained to value all personal use assets. d. Money market accounts are unlikely to lose value over time. - correct answer b Jay purchased a new home for $100,000. He put $20,000 down and financed the $80,000 balance. What is the impact of this transaction on his net worth? a. His net worth increases. b. His net worth decreases. c. His net worth remains the same. d. The net worth will decrease with each mortgage payment made. - correct answer c