High 5 - General Financial Planning

Question 1

GROOVE stands for:

Answer 1

Goal
Risk
Opportunity
Objective
Vulnerability
Evaluation

Question 2

The goal or objective of the question is what leads us to the __________

Answer 2

BEST answer; what is the “next step”

Question 3

At the heart of every question is the principal knowledge topic - then you have _________ variables

Answer 3

contextual

Question 4

Contextual variables may include:

Answer 4

Family status
Net worth
Income level
Life or professional stage
Other circumstances (health, family dynamics, etc)

Question 5

Financial planning job task domains also influence question writing and include:

Answer 5

establishing and defining client planner relationship

2. fathering necessary info
3. analyzing and evaluating current status
4. developing recs
5. communicating recs
6. implementing recs
7. monitoring recs
8. practicing withing professional and reg standards

Question 6

Financial statements always get tested - statement of financial position is the BS, statement of cash flows is CF; pay particular attention to ______

Answer 6

the FOOTNOTES

Question 7

BS is a snapshot on one day, CF is over ___________

Answer 7

a period of time

Question 8

Common to find questions around impact of various events on financial statements T/F

Answer 8

T

Question 9

Housing ratio/debt to income ratio shows up A LOT on the test, they are:

Answer 9

all monthly nondiscretionary housing costs/monthly gross <= 28%;

debt to income = all housing and other debt payments / gross income <= 36%

Question 10

ARMS without CAPS can lead to ____________ amortization –> beware to consider with client risk tolerance

Answer 10

NEGATIVE

Question 11

Break down lists of things (products, strategies, etc.) into FEATURES and BENEFITS

Answer 11

IE FHA features: very low initial down payment; mortgage insurance required (two types)

VA: no down payment, no mortgage insurance required

Reverse: 62 or older, has to have equity in the home, retains title, has to repay loan

Question 12

HELOCs can be used for ____________

Answer 12

any purpose

Question 13

Max amount of home equity debt for married is _________ for interest deductibility

Answer 13

$100k

Question 14

FDIC almost always shows up, what isn’t covered?

Answer 14

Securities, mutual funds, other investments

Question 15

Are different categories of ownership insured separately for FDIC?

Answer 15

Yes

Question 16

Education planning breaks down into:

Answer 16

needs calcs
funding vehicles
tax benefits
gifting
financial aid

Question 17

Phaseout thresholds are now PROVIDED in exam

Answer 17

TRUE

Question 18

PLUS loan is not ______ based

Answer 18

NEEDS

Question 19

529 plans often come out on top as you are selecting a ______ vehicle

Answer 19

education savings

Question 20

Putting money into a 529 plan can help to _____ assets from the _______

Answer 20

remove assets from the estate

Question 21

A change in the designated beneficiary for a qualified tution program is not taxable if new beneficiary is still ______

Answer 21

memeber of old benes family

Question 22

Testing on Coverdell won’t go that deep; Coverdell do cover expenses from ____ to ____

Answer 22

K-12 and higher education

Question 23

Coverdell contributions max out at ____ per ____

Answer 23

$2k per beneificiary, not per contributor

Question 24

Coverdell has to be distributed upon age ____

Answer 24

30

Question 25

Can combine an AOCT and Lifetime Learning Creidt and can exclude CESA distribution if not used for same expenses T/F

Answer 25

TRUE

Question 26

Know the difference between a financial aid grant and loan - a grant is a ____ and is not _____

Answer 26

grant is a gift and not paid back

Question 27

PLUS loans are not ____ based and have to be begin getting paid back after ____ days

Answer 27

not NEEDS based; repayment starts after 60 days

Question 28

For unsubsidized, govt does ____ pay the interest during the college years but it can be _____

Answer 28

does not pay, can b capitalized

Question 29

Feature of Health Care and Education Reconciliation Act of 2010 - borrowers on new loans starting in 2014 can base loan repayment on _____ of discretionary income

Answer 29

10%

Question 30

Questions on how would you rank accounts/investments to pay for education - ages, basis, penalty situation, etc.

Answer 30

IRA vs Roth early distribution requirements

Question 31

UGMA/UTMA and kiddie tax implications

Answer 31

probably only a standalone question

Question 32

One question about monetary vs fiscal policy; monetary is ____, fiscal is ____

Answer 32

monetary is the Fed and interest rates, fiscal is political and spending

Question 33

What are the three forms of bankruptcy?

Answer 33

1. Chapter 7 = estates and natural persons, firms, parternships, corporations, associations, unincorporated companies
2. Chapter 11 = reorg of persons, firms, corporations
3. Chapter 13 = adjustments of debts of individuals with regular incomes

Question 34

Roth and Tranditional IRA bankruptcy protection =

Answer 34

$1,283,025 exemption amount

Question 35

SEP, SIMPLE and rollover IRAs have _____ bankruptcy protection

Answer 35

unlimited

Question 36

Types of debt that cannot be discharged by chapter 7:

Answer 36

back taxes (up to three years)
debts with fraudulent activities
alimony or child support
debt due to international tort claims
student loans
consumer debts of more than $650 for luxury goods or services owed to a single creditor within 90 days of relief order