Busi 352 Financial Planning Quizzes 4-6 Certification Review Exam Questions And Answers Download.

Zack McKerley began college last year and is in the process of applying again for financial aid for his third year of college. Zack received some distributions from various sources to pay for his expenses in his rst year. Which one of the following distributions that occurred last year will not have an adverse effect on the financial aid that Zack may receive in the coming year? - correct answer A qualified distribution from a 529 Savings Plan that was funded with a transfer from Howard's UTMA account. Which of the following statements are true regarding front-loading of annual gift tax exclusions? STATEMENT ONE: The only type of account that can be front-loaded with 5 years of annual exclusion gifts is a Section 529 Savings Plan. STATEMENT TWO: The full amount of gifts placed in a front-loaded account will be immediately excluded from the donor's gross estate for estate tax purposes. - correct answer 1 only. Which of the following statements, if any, are correct? STATEMENT ONE: Grants are money provided to students that does not require repayment. STATEMENT TWO: A Federal Pell Grant is need-based nancial aid specically for students who have already received an undergraduate degree and are pursuing a graduate degree. - correct answer 1 only. Which of the following is not a repayment method for a Stafford Loan? - correct answer Success Repayment. Which of the following is a qualified education expense for the purpose of tax-free scholarships? - correct answer Textbooks. Which of the following statements, if any, is (are) correct? STATEMENT ONE: Prepaid Tuition plans provide for the prepayment of college tuition at current tuition prices (or current tuition prices plus a small premium) for future enrollment. STATEMENT TWO: A disadvantage of a QTP (qualified tuition plan) is that the owner / contributor must relinquish control of the account and share control of the funds with the student / beneficiary. - correct answer 1 only. Jody would like to plan for her daughter's college education. She would like for her daughter, who was born today, to attend college for 5 years, beginning at age 18. Tuition is currently $12,000 per year and tuition inflation is 6%. Jody can earn an after-tax rate of return of 8%. How much must Jody save at the end of each year, if she wants to make the last payment at the beginning of her daughter's first year of college? - correct answer $4,406.75. Harvey would like to plan for his son's college education. He would like for his son, who was born today, to attend college for 4 years, beginning at age 18. Tuition is currently $10,000 per year and tuition ination is 7%. Harvey can earn an after-tax rate of return of 10%. How much must Harvey save at the end of each year, if he wants to make the last payment at the beginning of his son's first year of college? - correct answer $2,845.81. Which of the following statements, if any, are correct? STATEMENT ONE: The Automatically Assessed Formula for determining the Expected Family Contribution (EFC) requires that the student or parent's AGI is less than $50,000. STATEMENT TWO: The Simplified Method for determining Expected Family Contribution (EFC) does not consider the family's assets in its formula. - correct answer 2 only. Which of the following is/are true regarding 529 Savings Plans? 1. Qualified distributions from a 529 plan can be used to pay for a computer. 2. There are no income limitations (phase-outs) on who can contribute to a 529 Savings Plan. 3. A federal income tax deduction is not permitted for contributions to a 529 Savings Plan. 4. All of the above. - correct answer All of the above. Johnny and June would like to begin saving for their children's college education. They have four kids, ages 1, 5, 11, and 14. Each child will begin college at 18 and attend a private university for four years. Tuition is currently $22,000 per year and is increasing at 4% per year. They can earn an after-tax rate of return of 9%. How much must they save at the end of each year if they would like to make the last payment at the beginning of their youngest child's last year of college? - correct answer $22,868. Which of the following statements will have the MOST negative impact on need-based financial aid? - correct answer The balance in an UGMA account. A family of four with total income of $45,000 and two students in college will likely qualify for which of the following? ONE: Pell grant. TWO: Subsidized Stafford loan. THREE: PLUS loan. - correct answer 1, 2, and 3. Ronnie is the custodian of his son Arthur's Section 529 plan. If Ronnie withdraws funds from the 529 plan to pay for plane tickets for Ronnie and Arthur to tour colleges, which of the following is true? - correct answer The withdrawal will be partially taxable earnings and partially tax-free withdrawal of principal, plus a 10% penalty will apply to the taxable portion. All of the following statements concerning education funding are correct EXCEPT: - correct answer The Uniform Gift to Minor's Act (UMGA) allows parents the option to put assets in a custodial account for a child and retain control over the funds until the child reaches the age of 14. Which of the following is not a goal of the Federal Deposit Insurance Corporation (FDIC)? - correct answer Protect consumer from excessive losses in the stock market. Social Security is a sizable program that impacts many families in the United States. Which of the following statements are correct regarding Social security? STATEMENT ONE: Social Security was never intended to provide a substantial wage replacement ratio for most Americans. STATEMENT TWO: Social Security skews benets towards lower wage earners and away from higher wage earners. STATEMENT THREE: Social Security provides 90% or more of the income for more than 20% of retired married couples. - correct answer 1, 2, and 3. Allison, age 40, earns $95,000 annually; her wage replacement ratio has been determined to be 70%. She expects ination will average 3% over her entire life expectancy. She expects to work until 67, and live until 95. She anticipates a 7.5% return on her investments. Allison does not expect to receive any Social Security retirement benefits. Calculate Allison's annual retirement needs in today's dollars. - correct answer $66,500. The supply of coffee has been drastically reduced due to a drought resulting in substantially higher prices. Which of the following statements is/are correct? STATEMENT ONE: The demand curve for coffee will shift to the right. STATEMENT TWO: The demand curve for creamer will shift to the left. STATEMENT THREE: The demand for orange juice will increase. - correct answer 2 only. Which of the following statements regarding retirement planning is correct? 1. A client's lifetime is made up of pre-work life expectancy, work life expectancy, and retirement life expectancy. 2. As a general rule, an individual beginning to save for retirement at age 30 should expect to save at least 10-13% of gross pay to meet his/her normal retirement goals. 3. As retirement life expectancy (RLE) increases, so do the retirement needs. 4. All of the above are correct. - correct answer All of the above are correct. Which of the following is not a primary responsibility of the Federal Reserve (Fed)? - correct answer Maintain fair practices between securities dealers. Terrance, age 43, earns $80,000 annually; and his wage replacement ratio has been determined to be 80%. He expects ination will average 3% for his entire life expectancy. He expects to work until 68 and live until 90. He anticipates an 8% return on his investments. Additionally, Social Security Administration has notied him that his annual retirement benet, in today's dollars will be $26,000. Using the capital needs / annuity method, calculate how much capital Terrance will need to be able to retire at age 68. - correct answer $1,112,863.56. Fritz has just retired with an investment portfolio equal to $1 million. He plans on using the 4% capital balance approach to retirement distributions. He also plans on distributing the amount in one lump sum at the beginning of the year. His first year, he distributes $40,000 to live on, in addition to his other income. However, the market takes a significant decline and his portfolio loses 20%. His second year, after he takes his distribution, his portfolio takes another decline of 20%. How much can he take in the third year if he is sticking with the 4% method? Round to the nearest thousand. - correct answer $24,000. Which of the following statements is correct? - correct answer A U.S. rugby player who plays professionally in New Zealand would be included in the U.S. GNP. Which of the following comes under an exemption from registration status of the Investment Advisers Act of 1940? - correct answer Advisors whose only clients are insurance companies. Mark is getting ready to retire. He has a salary of $100,000 and is saving 15% annually in his 401(k) plan and he just made his last principal and interest monthly payment on his mortgage of $2,350. His home is now debt free. What would you recommend regarding a wage replacement ratio, assuming he wants to maintain his lifestyle? - correct answer 50%. The period of time a person is expected to be in the work force is referred to as: - correct answer Work life expectancy. Which of the following is n