1.All the following statements concerning comprehensive financial planning are c
ID: 2621071 • Letter: 1
Question
1.All the following statements concerning comprehensive financial planning are correct, EXCEPT:
A.
In its purest form, it is provided only on the basis of commissions earned through the sale of financial products.
B.
It attempts to treat all of the client’s financial concerns and objectives.
C.
It can be provided in either a single client engagement and updated periodically thereafter, or it can be provided incrementally in a series of engagements with the client.
Its effective performance usually requires a team of specialists whose efforts are coordinated by the comprehensive financial planner.
2.
Which one of the following events would tend to reduce a family’s net worth?
A.A decline in the market value of the family’s assets
B. A repayment of the client’s debts before their maturity
C. The receipt of gifts from the client’s parents
D. The crediting of compound interest to the client’s bank savings account
3. All the following items are fixed expenses, EXCEPT:
A. Investments
Transportation
Income taxes
Auto insurance premium
4Who is typically responsible for preparing the client’s will?
The client
The financial planner
The accountant
The attorney
5.
Brandon presented the financial plan he developed for his clients Zach and Kayla Taylor. Kayla’s mom Sophia was also present at the meeting. Who should decide on making any changes to the financial plan?
I Brandon
II Zach
III Kayla
IV Sophia
I only
II and III only
I, II and III only
I, II, III, and IV
6.
All the following activities should take place during the step in the financial planning process when the financial planner is determining a client’s goals and gathering data, EXCEPT:
Seek objective data, not subjective information.
Prioritize the client’s goals.
Give the client a questionnaire to complete.
Determine the client’s financial risk tolerance.
7.
If assets increase, while liabilities remain the same, the effect on net worth in a family’s statement of financial position would be:
(Topic 9)
To increase net worth
To decrease net worth
To leave net worth unchanged
Indeterminate because it depends on whether the liabilities are short-term or long-term
8.
All the following statements concerning the second step of the financial planning process of determining goals and gathering data are correct, EXCEPT:
While the client must set the goals, the planner must determine the priorities according to the goals being achievable.
A planner must determine the client’s financial risk tolerance in this step before making recommendations.
A questionnaire is a useful and systematic way for the planner to structure the information gathering.
A client should be advised that some of the information that will be required by the planner is likely to be highly confidential.
9.
Which of the following statements concerning the net worth shown on a financial position statement is correct?
A client with negative net worth must file for bankruptcy.
A client with substantial net worth will have substantial cash flow.
A client with a negative net worth can have a positive cash balance.
A client with a high net worth cannot have a zero cash balance.
10.
On December 31, the Franklin Family had a net worth of $180,000. In January, the Franklins acquired a new automobile valued at $12,000, which reduced the family’s total cash by $5,000 and increased their liabilities by $7,000, and they experienced a $20,000 bonanza because of unrealized stock market gains. What is the family’s net worth after these changes?
$180,000
$192,000
$200,000
$212,000
A.
In its purest form, it is provided only on the basis of commissions earned through the sale of financial products.
B.
It attempts to treat all of the client’s financial concerns and objectives.
C.
It can be provided in either a single client engagement and updated periodically thereafter, or it can be provided incrementally in a series of engagements with the client.
Its effective performance usually requires a team of specialists whose efforts are coordinated by the comprehensive financial planner.
2.
Which one of the following events would tend to reduce a family’s net worth?
A.A decline in the market value of the family’s assets
B. A repayment of the client’s debts before their maturity
C. The receipt of gifts from the client’s parents
D. The crediting of compound interest to the client’s bank savings account
3. All the following items are fixed expenses, EXCEPT:
A. Investments
Transportation
Income taxes
Auto insurance premium
4Who is typically responsible for preparing the client’s will?
The client
The financial planner
The accountant
The attorney
5.
Brandon presented the financial plan he developed for his clients Zach and Kayla Taylor. Kayla’s mom Sophia was also present at the meeting. Who should decide on making any changes to the financial plan?
I Brandon
II Zach
III Kayla
IV Sophia
I only
II and III only
I, II and III only
I, II, III, and IV
6.
All the following activities should take place during the step in the financial planning process when the financial planner is determining a client’s goals and gathering data, EXCEPT:
Seek objective data, not subjective information.
Prioritize the client’s goals.
Give the client a questionnaire to complete.
Determine the client’s financial risk tolerance.
7.
If assets increase, while liabilities remain the same, the effect on net worth in a family’s statement of financial position would be:
(Topic 9)
To increase net worth
To decrease net worth
To leave net worth unchanged
Indeterminate because it depends on whether the liabilities are short-term or long-term
8.
All the following statements concerning the second step of the financial planning process of determining goals and gathering data are correct, EXCEPT:
While the client must set the goals, the planner must determine the priorities according to the goals being achievable.
A planner must determine the client’s financial risk tolerance in this step before making recommendations.
A questionnaire is a useful and systematic way for the planner to structure the information gathering.
A client should be advised that some of the information that will be required by the planner is likely to be highly confidential.
9.
Which of the following statements concerning the net worth shown on a financial position statement is correct?
A client with negative net worth must file for bankruptcy.
A client with substantial net worth will have substantial cash flow.
A client with a negative net worth can have a positive cash balance.
A client with a high net worth cannot have a zero cash balance.
10.
On December 31, the Franklin Family had a net worth of $180,000. In January, the Franklins acquired a new automobile valued at $12,000, which reduced the family’s total cash by $5,000 and increased their liabilities by $7,000, and they experienced a $20,000 bonanza because of unrealized stock market gains. What is the family’s net worth after these changes?
$180,000
$192,000
$200,000
$212,000
Explanation / Answer
1.
In its purest form, it is provided only on the basis of commissions earned through the sale of financial products is not correct about comprehensive financial planning. Because this this view assumes only fee paying planner have more objective.
Option (A) is correct answer.
2.
A decline in the market value of the family’s assets can tend to reduce a family’s net worth. this is because if market value of assets decrease then net worth of individual obviously declines.
Option (A) is correct answer.
3.
Income taxes payment depends on level of income of an individual. if level of income or capital gain on assest increase then income taxes also increase.
So, income taxes is not fixed among given option.
Option (C) is correct answer.
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