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Wrong Answer Deck > General Practice > Flashcards

General Practice Flashcards

1
Q

GP Ch 1 List the financial planning process.

A
  1. Understanding
  2. Identify and Select Goals
  3. Analyze
  4. Develop
  5. Present
  6. Implement
  7. Monitor
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2
Q

GP QUIZ 2 What must a CFP professional provide in writing and what can be written/orally provided?

A

Written or orally- Material conflicts of interest.
Written- Firms privacy policy, compensation, any bankruptcies or disciplinary action.

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3
Q

GP Quiz 2 What dovetails with the steps of the financial planning process?

A

The Practice standards - it explains how to perform each step of the financial planning process.

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4
Q

GP Quiz 2 How is a Fee Based planner compensated?

A

Fees and commission

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5
Q

GP 3-2 What’s on a cash flow statement?

A

Inflows- Outflows =Savings

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6
Q

GP 3-9 Checking account 3k, money market 12k, 401k 50k, Muni Bond 20k, credit card debt 5k, mortgage 50k…what’s the current ratio?

A

7….Bond is included as current asset

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7
Q

GP 4-3 Invested 25k in a mutual fund. Earns 12% annual rate compounded monthly. 5 years. What will the amount be at end of 5 years?

A

$45,417.42

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8
Q

GP 4-7 Calculate Real Rate of return

A

1+ after-tax return/1+ inflation rate then subtract 1 then multiply by 100

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9
Q

GP 4-10 Positive cash flow 6k,7k, 8k, over a 3 year period. Then at the end of 3 years sold it for 115k. Requires 12% return. What should he pay for investment?

A

98,486.47
0cfj, 6,000cfj, 7000cfj, 123000cfj, 12 I/YR, Gold NPV

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10
Q

GP 4-13 if NPV is equal to zero and 12% was the required rate of return. What can you conclude?

A

IRR is 12%. NPV is zero which means the IRR equaled the required rate.

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11
Q

GP 4-14 clients want to retire in 10 years. Current portfolio 1 million. During retirement they will draw 150k per year for 25 years then pass away with 1 million. What is the return they need to achieve?

A

6.88%
-1millionCfj, 0cfj, 10 good Nj, 150k Cfj, 25 good nj, 1 million cfj, Gold IRR/yr

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12
Q

GP 6-6 What is the maximum amount 1 grandparent can contribute in 1 year to a 529? How about both?

A

90k, 180k

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13
Q

GP 6-7 What is the maximum amount that can be contributed on behalf of a child from all sources combined into a Coverdell ESA?

A

$2000

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14
Q

GP 6-9 For ESA plans. When must the funds be used by? What is the phaseout? What expenses can it be used on?

A

Age 30, 190k- 220k MFJ, Elementary and secondary needs as well as college

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15
Q

GP 6-9 How is the gift to an ESA considered ? (Present or future interest?

A

Contributions are considered a gift if present interest

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16
Q

GP 6-10 UTMA/UGMA accounts. Which one can hold real estate?

A

UTMA

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17
Q

GP 6-17 Due to coordination rules in education planning. What combination of plans should you not choose?

A

Don’t select answers that include American opportunity credit, lifetime, coverdell ESA, or qualified tuition distribution. (In the same year)

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18
Q

GP Ch 6 quiz. Kid is 2. Will attend 4 year college. 12,500 in todays dollar costs. 8% investment yield, 5% inflation on college costs for 20 years. What is the lump sum needed now to fund college?

A

30,555
1- 12,500, 16yrs, 5% = 27,285.93
2- 27,285.93 2.8571%, 4yrs = 104,679.76
3- 104,679.76, 16yrs, 8% = 30,555

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19
Q

GP 7-13 CPI or PPI, which one leads the other?

A

PPI leads CPI

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20
Q

GP Quiz 7 What is an example for qualifying for compensatory damages?

A

Age discrimination

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21
Q

GP Quiz 7 Work related payout compensatory damage of 1 million. Settlement awarded in a single premium annuity. How is this taxed?

A

100% excludable because it’s a single premium annuity that a party is obligated to pay.

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22
Q

GP quiz 7 Lottery payout chosen as annuity payout. How is it taxed?

A

The payment received each year

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23
Q

GP quiz 7 What are some economic indicators.

A

SNP 500, supplier delivery days, initial unemployment claims. Yield curve isn’t

24
Q

GP 8-3 client obtains 100k 15 yr fixed 7.5% interest loan. How much interest will be paid during the life of the loan?

A

$66,861
12 gold P/yr, PV -100k, 7.5% I/yr, 15gold xp/yr, PMT?

$927.01x180 then subtract 100k

25
Q

GP Quiz 9 If adviser doesn’t charge commission and gives advice and charges a fee. How must he register?

A

As and IAR. Doesn’t need to register with FINRA

26
Q

GP Quiz 9 what does ADV Part 1 entail?

A

The applicants business address and background. Part 2 spells out compensation.

27
Q

GP Quiz 9 Which act requires persons or firms advising others about securities investments must register with the securities and exchange commission?

A

The Investment Advisers Act of 1940

28
Q

GP Quiz 10 What is written, explicit direction from the insurance company to the agent described as?

A

Express authority

29
Q

GP Quiz 10 The term that describes the obligation of the agent to the principal?

A

Loyalty, Express

30
Q

Rev. GP A CFP certificate shall notify the CFP board of a reportable matter within how many days?

A

30

31
Q

Rev GP Paula stone spent nearly a year and a half completing the CFP education courses and finally passing the exam. Upon submit talk of her paperwork, the CFP board found cause to suspend issuance of the CFP certificate for 2 yrs. Will the board publish such a suspension?

A

Yes, suspensions are automatically published.

32
Q

GP 2-1 which standard of conduct?
Hold the interests of the client above those of the planner and the firm.

A

Duty of loyalty

33
Q

GP 2-1 Which standard of conduct?
Balance conflicts of interest so as to maintain the clients best interest above all.

A

Duty of loyalty

34
Q

GP 2-1 Which standard of conduct?
CFP professional is required to act with the skill, prudence and diligence of a prudent professional in consideration of the clients goals, risk tolerance, and personal circumstances.

A

Duty of Care

35
Q

GP 2-1 Standards of conduct? CFP professional is required to comply with the clients instructions, objectives, policies, and restrictions presuming they are reasonable and lawful.

A

Duty to follow client instructions

36
Q

GP 2-2 Which conduct standard?
Deceive or defrauded clients, make untrue statements, Omit a material fact in order to mislead a client, encourage any business act that would operate as a fraud or deceit upon anyone

A

The integrity standard

37
Q

GP 2-3 What conduct standard? Provide professional services with relevant knowledge and skill. Recognize lack of k college in an area and obtain assistant of another professional, refer the client to one or more professionals, limit or terminate the engagement.

A

The competance standard

38
Q

GP 2-3 Conduct Standard? Provide services in a professional manner. Respond to reasonable client inquiries and requests in a timely fashion.

A

The diligence standard

39
Q

GP 2-3 Conduct Standard? Make full disclosure of all material and conflicts of interest that could affect the planner/client relationship. Disclose information relating to conflicts of interest in sufficient detail and understandable language. Detailed disclosure

A

The standard to disclose and manage conflict of interest.

40
Q

GP 2-3 When should disclosure of conflicts of interest be disclosed?

A

Prior to the time in which financial advice is given.

41
Q

GP 2-4 Conduct Standard? Exercise professional judgment that holds the clients best interest above that of the planner and/or firm. Refuse any gift, gratuity, cash or non cash consideration/payment that could compromise the CFPs professional objectivity.

A

The sound and Objective professional judgement standard

42
Q

GP 2-4 Which conduct standard? Treat others with dignity, courtesy, and respect. This includes clients, prospective clients, colleagues and the public in general.

A

The professional standard

43
Q

GP 2-4 Which conduct Standard? Comply with laws and rules that apply to the professional services of a financial planning practitioner and or may not intentionally or recklessly participate or assist in another persons violation of such standards, regulations, and rules.

A

The Standard to Comply with the Law

44
Q

GP 2-4 Conduct Standard? Maintain confidentiality regarding non public personal info pertaining to clients. Recognize the circumstances under which client info may be shared with others.

A

The confidentiality and Privacy Standard

45
Q

GP 2-5 SEC Regulation S-P

A

Notice requirements and restrictions on a financial institutions ability to disclose non public info about consumers. Must provide a notice of privacy.

46
Q

GP 2-22 A CFP professional would be required to notify his or her firm of the following forms of discipline except: private censure, letter of admonition, suspension, revocation of the use of the CFP Marks.

A

Private censure. Must notify my employer regarding PUBLIC disciplinary actions by the CFP board. Private censure is not shared with the public by the board. The others are public.

47
Q

GP 2-25 What are some public disciplinary actions the DEC can impose?

A

In order of severity
A public letter of admonition, suspension for up to 5 years, or permanent revocation of the marks.

48
Q

GP 2-25 what are some private disciplinary actions the DEC could take?

A

Requirement for additional continuing education and or private censure citing the Practice Standards Violation.

49
Q

GP Final Watkins obtain a mortgage on their new home for 100k. The 30 yr mortgage payment will be 700/mo. How is this transaction reflected on the clients financial statement? Assets will increase, liabilities will decrease, net worth will increase, cash outflows will decrease.

A

Assets will increase

50
Q

GP Final. Client has a child that’s 19 years old and about to start college. Client would like to contribute to a coverdell ESA. Whats the issue?

A

Kid is over 18

51
Q

GP final. Six years ago, Mrs chambers took a reverse mortgage to supplement her retirement income. Over the years her health deteriorated and she died. She has 3 grown children. Are her children responsible for the selling of the house and paying off her balance?

A

Yes, they could sell the house or refinance to pay off the balance of the reverse mortgage

52
Q

GP Final. Barry is registered rep of a major security firm. He gives on stocks and bonds and gets a commissions on sales. Larry is a CFP and cpa, does financial planning. Who needs to register as an investment advisor?

A

Barry doesn’t because he’s affiliated with a broker dealer and doesn’t specifically charge for planning. Larry has to register.

53
Q

GP Final Can a CFP certificate commingle client funds with the funds of the financial planning firm?

A

No, because it’s a financial planning firm. But checks can be made out to the broker dealer or custodian

54
Q

GP Final Is it up to the CFP professional to set realistic goals?

A

No it’s on the client to decide on the goals.

55
Q

GP Final John and Mary took out a 142k 30 yr loan 5 yrs ago. The interest rate was 9%. They are now considering refinancing. They can obtain a 7.2-% 15yr loan on 136,150 and pay 2000 in points from their fund. What are the monthly payments?

A

1,239.03

Wrong Answer Deck (9 decks)

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