BUSI352 quiz 5 complete solutions correct answers key/ BUSI 352 quiz 5 (All versions 2019)
Liberty University BUSI352 quiz 5 complete solutions correct answers key
Question 1 An investor purchased a bond for $980, received $75 in interest, and then sold the bond for $950 after holding it for seven months. What is the holding period return?
Question 2 The risk which a firm may not be able to meets its debt obligations is known as:
Question 3 Cathy and her twin sister Carley, both age 25, each believe they have the superior savings plan. Cathy saved $5,000 at the end of each year for ten years then let her money grow for 30 years. Carley on the other hand waited 10 years then began saving $5,000 at the end of each year for 30 years. They both earned 9% on their investment and are 65 years old today and ready to retire. Which of the following statements is correct?
Question 4 The type of risk which measures the extent to which a firm uses debt securities and other forms of debt in its capital structure to finance is known as:
Question 5 The type of risk which cannot be eliminated through diversification is:
Question 6 Michael has an investment with the following annual returns for four years. Year 1: 12% Year 2: 5% Year 3: 8% Year 4: 18% What is the arithmetic mean (AM) and what is the geometric mean (GM)?
Question 7 Which of the following statements regarding investment risk is correct? 1: Beta is a measure of systematic, nondiversifiable risk. 2: Rational investors will form portfolios and eliminate systematic risk. 3: Rational investors will form portfolios and eliminate unsystematic risk. 4: Systematic risk is the relevant risk for a welldiversified portfolio. 5: Beta captures all the risk inherent in an individual security.
Question 8 Sylvia has two assets in her portfolio, asset A and asset B. Asset A has a standard deviation of 40% and asset B has a standard deviation of 20%. 50% of her portfolio is invested in asset A and 50% is invested in asset B. The correlation for asset A and asset B is 0.90. What is the standard deviation of her portfolio?
Question 9 Municipal bonds that are backed by the income from specific projects are known as:
Question 10 Mutual fund XYZ has a beta of 1.5, a standard deviation of 12%, and a correlation to the S&P 500 of 0.80. How much return of fund XYZ is due to the S&P 500?
Question 11 Which factors may affect an individual’s retirement plan? 1: Work life expectancy 2: Retirement life expectancy 3: Savings rate 4: Investment returns 5: Inflation
Question 12 Tyrone, age 25, expects to retire at age 60. He expects to live until age 90. He anticipates needing $45,000 per year in today’s dollars during retirement. Tyrone can earn a 12% rate of return and he expects inflation to be 4%. How much must Tyrone save, at the beginning of each year, to meet his retirement goal?
Question 13 Which of the following would be considered a systematic risk?
Question 14 The following investment return will result in what dollar weighted return? An initial outlay of $50,000, with three years of additional outflows of $10,000 each, and inflows as follows: $0 the first year, $20,000 in years 2 and 3, and sale of the property at the end of year 3 for $75,000.
Question 15 What is the weighted average beta of the following portfolio? Stock L has a beta of 1.45 and constitutes 10% of the portfolio; Stock M has a value of $125,000, with a beta of 0.93; While Stock N makes up 40% of the portfolio with a beta of 0.65, and Stock O, with a 2.2 beta has a dollar value of $175,000.
Lisa Cooper recently came to your office for her second appointment after receiving her engagement letter. What is the next step?
Your client, Jed, engaged you to help him with his financial situation. You sold a life insurance policy- what part of planning are you in?
Which part of financial planning do you prepare financial statements?
Reverend Lola Pack, came in to your office. How do you greet her?
Steve Stein, a CFP… which of his actions are inappropriate?
Which of the following is least likely to be obtained from your client?
The most important quality a CPF brings to the relationship is:
Which credential is the oldest and best known?
Which of the following is considered to be a counseling paradigm or school of thought?
Which are consistent with the Humanistic paradigm?
Which of the following is NOT a premise in traditional finance?
Which of the following are important in nonverbal communication and behavior?
Which of the following is not true is communicating with a client?
Which of the following are components are passive listening?
Which of the following are NOT components of active listening?
Which of the following theories or equations are used in traditional finance?
Which of the following investors would apply in the realm of behavioral finance?
Which of the following is NOT a basic premise in behavioral finance?
Which of the following are NOT heuristics or cognitive biases discussed?
Which is true?
Which schools of thought for counseling could an advisor combine?
Which of the following choices are false as to open or closed questions?
Which of the following are true about “why ” questions?
1: tempting and may help understand the client’s motives, the why question may be ill-advised because it could have limited benefit for the client
2: a why question could place the client in a position of having to justify what was done, and that could put the client in a defensive posture
Which of the following is the best choice for behavioral finance?
You have been working with Brenda for 3 months. You have developed a mission statement, goals and objective and now you’re constructing a plan. Which approach to financial planning are you using?
During your work with your new client, you created picture representations of how he spends his money. Which approach are you using?
Rachel is 30 and single. She is healthy, has no children and works earning $40k. All of the following are likely insurance coverage needs, except?
David, 33, and Kristine, 34 are married. Which of the following is a likely goal?
Paul & Lucy Martin (65)- which of the following is their most important need/goal?
Curtis is 60. Which phase of the life cycle is he in?
Your new client, Kari, age 35 came into today. What are you likely to say?
Darrin and Kathi are 44. What statement are you likely to make during your next meeting?
Which of the following is true?
Ronnie is 55, divorced with 2 kids. Which is true?
Natalie & Brian visited your office today. They are in their early 30’s with 2 kids and one on the way. Which is true?
Utilizing investment assets to gross pay benchmarks, which of the following individuals is likely on target with their investment assets?
You currently manage Cody’s investment portfolio. Which is correct?
Utilizing the three panel approach, which of the following would be evaluated in Panel 1- Risk management?
Robin met with you recently to make changes to her insurance needs. Which of these recommendations will have a positive cash flow impact from an insurance perspective?
CJ bought the following assets this year- which would be considered “bad debt”?
Adriana is an analyst at High Tech Hedge, where she earns $150k with a bonus of $50k. What is her savings rate this year?
Candice/Janice earns $85k working as an admin assistant in NY. What is her savings rate?
Mark and Caren are 36 years old and plan on retiring at age 62. The currently earn $250,000 a year and expect to need $200,000 in retirement. What should they do?
Jack and Jill are 41 and plan on retiring at 65 and living until 95. What should they do?
Your client, Tom, asked you to prepare his financial statements. Him & his wife have a disagreement- which statement will help them resolve this?
Your client, Meg, asked you several questions about her balance sheet. Which is true?
Craig’s financial planner is preparing his balance sheet. Which would not be considered “cash and cash equivalent”?
Craig’s financial planner is preparing his balance sheet. Which would be considered an investment asset?
Which of the following statements concerning the valuation of assets on the balance sheet is correct?
Which of the following would not generally be considered a short-term liability?
Jay purchased a new home for $100,000. He put $20,000 down and financed $80,000 balance. What is the impact on his net worth?
Nathan & Evan (brothers) are joint property owners. Nathan owns 60, Evan owns 40. How is this property owned?
Which of the following property ownership regimes has right of survivorship feature?
Which of the following statements concerning income and expenses listed on the income statement is correct?
A financial planner is currently preparing a client’s cash flow statements. Which of the following would be classified as a financing activity?
A client, Marie, age 35 came in today. When considering the targeted benchmarks, which of the following statements is the planner most likely to make?
Roget and Julie are married. Roger is a police officer and earns $50k. What is their total savings rate?
While meeting with your new client about retirement needs, you have made several assumptions. You engage is the process of changing some to see the impact on the plan. What is this process called?
Steve and his wife Christine recently opened an investment account with the intention of saving enough to purchase a house. How much do they need to put in to reach their goal?
Jordan invested $12,500 to help her friend Dylan start his own cooking school 5 years ago. What is the amount of the check Dylan has for Jordan today?
Colleen’s grandfather set up a savings account for her with a $25,000 gift when she was first bone. To date, how much has accumulated?
DRI Enterprises needs to have a lump-sum deposit of $200,000 for the purchase of a surety bond in 6 months. How much will they need to deposit?
Claire just won the lottery and has been told that she can either accept annual payments at the beginning of each year for 20 years of a lump sum. What amount would the lump-sum be?
Mark and Sonya would like to have the opportunity to buy a home in the next five years. What amount can you tell them that they will have for a down payment when they are ready?
Alberto saved enough tip money from working at the casino to place $125,500 in an investment account. How many months will Alberto have this income coming to him?
David purchased stock 15 years ago for $325.75 and sold the stock today for $2,500. What is the average annual compound rate of return that David realized on this stock?
Kelly has asked her accountant, Darla, to determine whether her company, Gaggin Industries, should purchase a new machine for $155,000 that can be sold for $125,000 in 5 years. What will Darla tell her?
Donna plans to save for a vacation to Costa Rica in 18 months. She will be putting money into a short-term investment account. How much will she have to put away each month?
Liam bought a piece of equipment for $10,000. He paid $3,000 for upgrades during year 1… what is his IRR?
With interest rates at 4.875% for a 30-year fixed mortgage, Dan, age 48, plans to buy a house for $825,000. What will his monthly mortgage payment be for principal and interest?
Bobby bought a house for $275,000 by putting 15% down and borrowing the balance. How much interest will he pay this year?
Bobby bought a house for $275,000 by putting 15% down and borrowing the balance. How much principal did he pay in the current year?
Cindy won the california lottery. She can take single lump-sum payments or payments for 25 years. What rate of return would Cindy need to break even?
Danny buys a house for $500,000 putting 20% down. His loan is for 30 months. How much is his normal payment?
Frank and Stephanie have an 18 year old son who is going to college this year. What lump-sum amount must they deposit today to pay for his education?
In 5 years, Joe wants to buy a boat that costs $75,000 in today’s dollars. What will his serial payment at the end of the second year be?
Which of the following statements concerning educational tax credits and savings opportunities is correct?
Mitch and Jennifer have AGI of $125,000 and have not planned for children’s education. Which is the most appropriate recommendation?
Tan & Chia are contemplating making a contribution to their grandchildren’s education fund. They are both retired. Which technique would you recommend?
Al of the following statements are true, except?
Which of the following types of aid are not needs based?
The following type of financial aid is rewarded to students with a low EFC, and funds are guaranteed to be available if a student qualifies.
Roshan is a freshman at Florida State University where tuition is $4,000. His sister is a graduate student at another university where tuition is $25,000. What is the maximum tax credit his parents can take?
What is one of the primary differences between a Coverdell ESA and a 529 savings plan?
Reba has a son, Chad, a freshman at Tulane with tuition of $30,000. Her AGI is $45,000. Which of the following would you recommend?
Peter wants to save some money for his daughter Gwen’s education. How much must he save at the end of each year?
Kim and Nick are planning to save for their daughter Chloe’s college education. How much must they save at the end of each year, if they want to make their last savings payment at the beginning her her first year of college?
What is the PV of all college education for 5 children if the cost today is $17,000 per year?
What is the PV of the cost of college education for 4 children if the current cost is $25,000?
Using previous information, how much do the parents have to save annually at year-end through the education of the youngest child?
Lanie is a single Mom who has 3 children. How much must she save?
George has been in academia his whole career. How much should he set aside today to fund his goal for his grandchildren if he can earn a rate of 9%?
CJ is 40 and wants to retire in 25 years. How much does Edward need to save each year?
Which of the following expenditures will most likely increase during retirement?
Margaret, a 35 year old client, who earns $45,000 a year. Calculate wage-replacement ratio.
Danny would like to determine his financial needs during retirement. All of the following are expenditures he might eliminate except:
Which expenditure would you expect to decrease during Susie’s retirement?
Tiffany, a self-employed dentist, currently earns $100,000 each year. What do you expect her wage replacement ratio to be at retirement?
Which factors may affect an individual’s retirement plan?
Contributing $1,500 to his retirement fund at the end of each year beginning at age 18 through 50, how much does Juan have in his retirement account?
When Steve and Roslyn retire together, they wish to receive $40,000 additional income at the beginning of each year. How much will they need to have in their fund at the time of retirement?
Tyrone, Age 25, expects to retire at age 60. He expects to live until 90. How much must he save to meet his goal?
Roy & Barbara are near retirement. They have a joint life expectancy of 25 years in retirement. Calculate the total amount that needs to be in place when the begin retirement.
Cathy and her twin sister Carley, both age 25, each believe they have the superior savings plan. Which is correct?
Shelley saves $3,000 per year for 10 years. Kevin saves $3,000 a year between ages 36-65. What is the value of their accounts at 65?
Kwame and Omarosa. What is the monthly benefit amount they will receive during retirement?
Charlie would like to retire in 11 years at age 66. If he currently earns $150,000 how much does he need at retirement?
Bowie, age 52, has come to you for help in planning for retirement. How much will Bowie need to have accumulated to provide for retirement lifestyle?
Which of the following statements is false?
Margaret, a 35-year-old client who earns $45,000 a year, pays 7.65% of her gross pay in Social Security payroll taxes, and saves 8% of her annual gross income. Assume that Margaret wants to maintain her exact pre-retirement lifestyle. Calculate Margaret’s wage replacement ratio using the top-down approach (round to the nearest %) and using pre-tax dollars.
Ralf, a 40-year-old nurse who earns $80,000 a year, saves 14% of his annual gross income. Assume that Ralf wants to maintain his exact pre-retirement lifestyle. Calculate Ralf’s wage replacement ratio using the top-down approach (round to the nearest %) and using pre-tax dollars.
Danny would like to determine his financial needs during retirement. All of the following are expenditures he might eliminate in his retirement needs calculation except
Susie has the following expenditures during the current year:
EXPENSE AMOUNT 1. Health Care $800 2. Savings $4,000 3. Travel $500 4. Gifts to Grandchildren $1,000
Which of these expenditures would you expect to decrease during Susie’s retirement? Selected Answer: 2 only
Tiffany, a self-employed dentist, currently earns $100,000 per year. Tiffany has always been a self proclaimed saver, and saves 25% per year of her Schedule C net income. Assume Tiffany paid $13,000 in Social Security taxes. Tiffany plans to pay off her home mortgage at retirement and live debt free. She currently spends $25,000 per year on her mortgage. What do you expect Tiffany’s wage replacement ratio to be at retirement based on the above information?
Contributing $1,500 to his retirement fund at the end of each year beginning at age 18 through age 50, with an average annual return of 12%, how much does Juan have in his retirement account at this time to use toward a possible early retirement?
Steve and Roslyn are retiring together today and they wish to receive $40,000 of income (in the equivalent of today’s dollars) at the beginning of each year from their portfolio. They assume inflation will be 4% and they expect to realize an after tax return of 8%. Based on life expectancies, they estimate their retirement period to be about 30 years. They want to know how much they should have in their fund today.
Roy and Barbara are near retirement. They have a joint life expectancy of 25 years in retirement. Barbara anticipates their annual income in retirement will need to increase each year at the rate of inflation, which they assume is 4%. Based on the assumption that their first year retirement need, beginning on the first day of retirement, for annual income will be $85,000, of which they have $37,500 available from other sources, and an annual after-tax rate of return of 6.5%, calculate the total amount that needs to be in place when Roy and Barbara begin their retirement.
Shelley saves $3,000 per year, for ten years, at the end of each year starting at age 26 and ending at age 35. She invests the funds in an account earning 10% annually. Shelley stops investing at age 35, but continues to earn 10% annually until she reaches the age of 65. In contrast, Kevin saves $3,000 per year at the end of the year between the ages of 36 and 65 inclusively and invests in a similar account to Shelley, earning 10% annually. What is the value of Shelley’s and Kevin’s separate accounts at age 65?
Kwame and Omarosa, both age 40, have $80,000 of combined retirement assets. They both expect to retire at the age of 65 with a life expectancy of 100 years old. They expect to earn 10% on the assets within their retirement accounts before retirement and 8% during their retirement. If they did not make any additional contributions to their account and they receive a fixed monthly annuity benefit for life, what is the monthly benefit (annuity due) amount they will receive during retirement?
Charlie would like to retire in 11 years at the age of 66. He would like to have sufficient retirement assets to allow him to withdraw 90% of his current income, less Social Security, at the beginning of each year. He expects to receive $24,000 per year from Social Security in today’s dollars. Charlie is conservative and assumes that he will only earn 9% on his investments, that inflation will be 4% per year and that he will live to be 106 years old. If Charlie currently earns $150,000, how much does he need at retirement?
Bowie, age 52, has come to you for help in planning his retirement. He works for a bank, where he earns $60,000. Bowie would like to retire at age 62. He has consistently earned 8% on his investments and inflation has averaged 3%. Assuming he is expected to live until age 95 and he
has a wage replacement ratio of 80%, how much will Bowie need to have accumulated as of the day he retires to adequately provide for his retirement lifestyle?
Assuming the same facts as Question 15, approximately how much must Bowie save at the end of each year, from now until retirement, to provide him with the necessary capital balance assuming he has a zero balance today?
Utilizing the facts given in Question 15, how much more will Bowie need at retirement to have the same amount at his death as he will have (calculated in #15) at his retirement?
Utilizing the facts given in Question 15, how much more will Bowie need at retirement to have the same amount at his death with an equal purchasing power as he will have (calculated in #16) at his retirement?
Robin is planning for her retirement. She is currently 37 years old and plans to retire at age 62 and live until age 97. Robin currently earns $100,000 per year and anticipates needing 80% of her income during retirement. She anticipates Social Security will provide her with $15,000 per year at age 62, leaving her with required savings to provide $65,000 ($100,000 x 0.80 – $15,000) annually during retirement. She believes she can earn 11% on her investments and inflation will be 2% per year. How much must Robin save at the end of each year, if she wants to make her last savings payment at age 62 to meet her retirement goal?
Assume the same facts as in question 19 except that Robin would like to have the same amount in retirement savings at age 97, as she does at age 62, when she retires. How much must Robin save at the end of each year, if she wants to make her last savings payment at age 62, and maintain the original account balance needed at retirement for the entire retirement life expectancy?
Assume the same facts as in question 19 except that Robin would like to have the same purchasing power in retirement savings at age 97, as she does at age 62, when she retires. How much must Robin save at the end of each year, if she wants to make her last savings payment at age 62 to meet her retirement goal, assuming she wants to maintain the original purchasing power of her capital balance?
· Question 1
2 out of 2 points
George had three credit cards stolen. Before he realized they were stolen, the following amounts were already fraudulently charged.
American Express $2,000
VISA $500
MasterCard $40
How much is George’s expected liability for the fraudulent charges?
· Question 2
2 out of 2 points
If the Federal Reserve wants to decrease interest rates, which of the following actions might it take?
Selected Answer:
· Question 3
0 out of 2 points
Over which time frame do leading economic indicators predict changes to the economy?
Selected Answer:
· Question 4
2 out of 2 points
Which tpye of bankruptcy filing allows an individual to keep their assets and pay off a portion of their debt over time?
Selected Answer:
· Question 5
0 out of 2 points
What does the Producer Price Index (PPI) measure?
Selected Answer:
· Question 6
2 out of 2 points
Which of the following is NOT a function of the Federal Deposit Insurance Corporation (FDIC)?
Selected Answer:
· Question 7
2 out of 2 points
Which of the following is not a consumer protection law?
Selected Answer:
· Question 8
2 out of 2 points
In a bankruptcy proceeding, all of the following claims will be discharged except:
Selected Answer:
· Question 9
2 out of 2 points
Which of the following does NOT play a part in a financial planner’s recommendations?
Selected Answer:
· Question 10
2 out of 2 points
What can be said about demand, if the price of a luxury boat decreases by a small amount and there is a significantly large increase in demand?
Selected Answer:
· Question 11
2 out of 2 points
Gross Domestic Product (GDP) represents the net output of a country by its citizens and foreigners in the country over a specific period of time.
Selected Answer:
· Question 12
2 out of 2 points
Gross Domestic Product (GDP)is typically measured on which of the following intervals?
1- Monthly
2- Quarterly
3- Semiannually
4- Annually
Selected Answer:
· Question 13
2 out of 2 points
What phase of the business cycle is characterized by low interest rates and high unemployment?
Selected Answer:
· Question 14
2 out of 2 points
Because of a shortage in supply, the price of wheat increases suddenly, causing a decrease in the demand for wheat and an increase in the demand for oats. Which term best describes the relationship between wheat and oats?
Selected Answer:
· Question 15
0 out of 2 points
What phase of the business cycle is characterized by increasing inflation rates and increasing interest rates?
Selected Answer:
·
Gross Domestic Product (GDP) represents the net output of a country by its citizens and foreigners in the country over a specific period of time.
Selected Answer:
· Question 2
2 out of 2 points
A change in quantity demanded causes movement along the demand curve. Which of the following is the likely cause of a change in quantity demanded?
Selected Answer:
· Question 3
2 out of 2 points
A supermarket puts bacon on sale, which increases the demand for eggs. What are the two products?
Selected Answer:
· Question 4
2 out of 2 points
The US government’s ability to influence the economy through the use of taxation and government spending is known as?
Selected Answer:
· Question 5
2 out of 2 points
What does the Producer Price Index (PPI) measure?
Selected Answer:
· Question 6
2 out of 2 points
What can be said about demand, if the price of a luxury boat decreases by a small amount and there is a significantly large increase in demand?
Selected Answer:
· Question 7
2 out of 2 points
What does the Index of Coincident Indicators reflect?
Selected Answer:
· Question 8
0 out of 2 points
Over which time frame do leading economic indicators predict changes to the economy?
Selected Answer:
· Question 9
2 out of 2 points
George had three credit cards stolen. Before he realized they were stolen, the following amounts were already fraudulently charged.
American Express $2,000
VISA $500
MasterCard $40
How much is George’s expected liability for the fraudulent charges?
Selected Answer:
· Question 10
2 out of 2 points
In a bankruptcy proceeding, all of the following claims will be discharged except:
Selected Answer:
· Question 11
2 out of 2 points
Because of a shortage in supply, the price of wheat increases suddenly, causing a decrease in the demand for wheat and an increase in the demand for oats. Which term best describes the relationship between wheat and oats?
Selected Answer:
· Question 12
2 out of 2 points
Which of the following are goals of the Federal Reserve’s monetary policy?
1- Maintaining low inflation
2- Maintaining price levels
3- Maintaining US balance of trade
4- Maintaining long-term economic growth
5- Maintaining full employment
Selected Answer:
· Question 13
2 out of 2 points
Which of the following is NOT an example of monetary policy?
Selected Answer:
· Question 14
0 out of 2 points
Peter Wentworth lost a wrongful death lawsuit and was ordered to pay the plaintiff $5 million dollars. As a result of the lawsuit, Mr. Wentworth filed for bankruptcy. Which of the following assets are exempt assets in bankruptcy from his creditors?
1- Art collection worth $1.75 million
2- A brokerage account worth $1.9 million
3- A Roth IRA worth $750,000
4- A conversion IRA worth $1.45 million
Selected Answer:
· Question 15
2 out of 2 points
Which of the following is NOT a function of the Federal Deposit Insurance Corporation (FDIC)?
· Question 1
0 out of 2 points
Which of the following decisions regarding a petition for reconsideration by a candidate for certification may the Commission make?
· Question 2
2 out of 2 points
How would the CFP Board rule in the following situation: A number of years ago Mark was divorced and subsequently had severe financial issues. Two years ago, he filed for bankruptcy. After recovering financially, he decided to become a CFP® professional. Today, he has made his application to the CFP Board for certification.
· Question 3
2 out of 2 points
Lisa, a CFP® professional, has been working with her new client John. She has completed all required disclosures and provided all written documents required for a financial planning engagement. John is 42, divorced, and has one child. Lisa discussed John’s insurance coverage following a thorough review of John’s policies and recommended John purchase a disability policy and additional term life insurance through his employer. Lisa also performed a retirement needs analysis and developed an investment plan she believes will help John achieve his goals.
While presenting the retirement and investment plan, John mentioned that he was rejected for the life insurance for medical reasons that he does not wish to discuss with Lisa.
To comply with the Practice Standards of the Code of Ethics, Lisa should:
· Question 4
2 out of 2 points
Which of the following does not apply to Practice Standard 500-2, which provides that the financial planning practitioner shall select appropriate products and services that are consistent with the client’s ______?
· Question 5
0 out of 2 points
Which of the following are true with respect to the Practice Standards?
1- The scope of the engagement does not have to be in writing.
2- Includes monitoring responsibilities after a financial plan is implemented.
3- Each Practice Standard is a statement regarding one of the steps in the financial planning process or investments planning process.
· Question 6
2 out of 2 points
Under the CFP Board’s Rules of Conduct, which of the following are a category of rules within the CFP Board’s Rules of Conduct?
· Question 7
2 out of 2 points
What should Tim, the CFP® professional do in this scenario: Client Bill seems to be suffering from dementia and wants to remove his children from his will and give all his wealth to Marsha, a neighbor who periodically visits Bill and delivers him groceries.
· Question 8
2 out of 2 points
Which of the following is true with respect to forms of discipline?
1- The Commission may order suspension for an unspecified period of time.
2- If the Disciplinary and Ethics Commission orders revocation of a certificant’s or registrant’s right to use the marks, the revocation is permanent until after a period after five years, at which time a request for reinstatement can be made.
3- All revocations issued by the Commission are permanent.
· Question 9
2 out of 2 points
Which of the choices below are required to be provided to Steve according to the Code of Ethics in this scenario: Norman is a CFP® professional. He recently met with a new client, Steve, who requested a needs analaysis concerning Steve’s life insurance situation. Steve is 43 years old, married, and has 2 children he plans to send to college. Steve wants Norman to evaluate how much and what type of insurance he should purchase.
· Question 10
2 out of 2 points
Matthew, a CFP® professional, who works for brokerage firm that requires any investment products or loans offered to a client must be proprietary products of the brokerage firm. One of Matthew’s clients, Henry, that he has been providing financial planning services to for the past 10 years asked Matthew to recommend a loan. Matthew is still engaged in the financial planning process with Henry. According to the CFP Code of Ethics, what action is Matthew required to take?
· Question 11
2 out of 2 points
Which of the following is/are specifically addressed in the CFP Board’s Standards of Professional Conduct?
1- Conflicts of interest
2- Care of a Fiduciary
3- Implementing and monitoring a financial plan designed for a client
4- Comparing rates of return for exchange traded funds
5- Recommending low cost investments
· Question 12
0 out of 2 points
Which of the following are NOT client responsibilities during the financial planning process?
1- To pay their fees.
2- To provide the professional with all requested information.
3- To interpret all the information that is gathered.
4- To implement the financial plan.
· Question 13
2 out of 2 points
Based on Rule 3.7 of the CFP® rules of conduct (A certificant shall not lend money to a client), which of the statements below is accurate for this scenario: Jane is a loan officer at a bank. Jane recently had a meeting with her financial planner Sally, a CFP® professional. Jane needed a loan and borrowed $18,000 from Sally.
· Question 14
2 out of 2 points
Which of the following are necessary inputs to determine a client’s goals according to Practice Standard 200-1 Determining a Client’s Personal and Financial Goals, Needs and Priorities?
1- Client’s values
2- Client’s expectations
3- Client’s attitude
4- Client’s current income
· Question 15
2 out of 2 points
The intent behind the principles of the CFP Board’s Code of Ethics is best described by which of the following?
Spring 2019 BUSI 352-B01 LUO
201920 Spring 2019 BUSI 352-B01 LUO
• Question 1
2 out of 2 points
Why is inflation important to consider in retirement planning?
• Question 2
0 out of 2 points
David, age 52, has come to you for help in planning his retirement. He works for a bank, where he earns $60,000. David would like to retire at age 62. He has consistently earned 8% on his investments and inflation has averaged 3%. Assuming he is expected to live until age 95 and he has a wage replacement ratio of 80%, how much more will David need at retirement to have the same amount at his death as he will have at his retirement?
• Question 3
0 out of 2 points
Shannon is planning for her retirement. She is currently 35 years old and plans to retire at age 60 and live until age 95. Shannon currently earns $100,000 per year and anticipates needing 80% of her income during retirement. She anticipates Social Security will provide her with $15,000 per year leaving her with required savings to provide $65,000 ($100,000 x 0.80 – $15,000) annually during retirement. She believes she can earn 11% on her investments and inflation will be 2% per year. Assume Shannon would like to have the same purchasing power in retirement savings at age 95, as she does at age 60, when she retires. How much must Shannon save at the end of each year, if she wants to make her last savings payment at age 60 to meet her retirement goal, assuming she wants to maintain the original purchasing power of her capital balance?
• Question 4
2 out of 2 points
Rick would like to retire in 11 years at the age of 66. He would like to have sufficient retirement assets to allow him to withdraw 90% of his current income, less Social Security, at the beginning of each year. He expects to receive $24,000 per year from Social Security in today’s dollars. Rick is conservative and assumes that he will only earn 9% on his investments, that inflation will be 4% per year and that he will live to be 106 years old. If Rick currently earns $150,000, how much does he need at retirement?
• Question 5
2 out of 2 points
Jane has the following expenditures during the current year.
1- Health Care $950
2- Travel $800
3- Savings $3,800
4- Gifts to Grandchildren $1,400
Which of these expenditures would you expect to decrease during Jane’s retirement?
• Question 6
2 out of 2 points
Wilber, age 25, is hoping to retire at age 60. He expects to live until age 90. He anticipates needing $45,000 per year in today’s dollars during retirement. Tyrone can earn a 12% rate of return and he expects inflation to be 4%. How much must Wilber save, at the beginning of each year, to meet his retirement goal?
• Question 7
2 out of 2 points
David, age 52, has come to you for help in planning his retirement. He works for an insurance company, where he earns $60,000. David would like to retire at age 62. He has consistently earned 8% on his investments and inflation has averaged 3%. Assuming he is expected to live until age 95 and he has a wage replacement ratio of 80%, how much will David need to have accumulated as of the day he retires to adequately provide for his retirement lifestyle?
• Question 8
0 out of 2 points
Phil and Sherry, both age 40, have…
