Liberty
University BUSI 352 quiz 2 solutions answers right
How
many versions: 4 versions
Question 1 Utilizing investment assets to
gross pay benchmarks, which of the following individuals is likely on target
with their investment assets?
Question 2 Your new client, Kerri, age 35,
came into your office today. She provided you with the following information
for the year. Income $100,000 Taxes $18,000 Rent $14,000 Living Expenses
$40,000 Credit Card Debt $12,000 Savings $5,000 Student Loan Payments
$5,000 Car Payment $6,000 After receiving this information, you created a pie
chart to visually depict where her income was spent. Utilizing targeted
benchmarks, which of the following statements are you most likely to make
during you next meeting?
Question 3 Which of the following
statements concerning the valuation of assets on the balance sheet is correct?
Question 4 Curtis is 60 years old. He plans
to retire in five years. He has amassed a net worth of $1,500,000 which he
expects will sustain him during retirement. He is divorced with two adult
independent children. Which phase of the life cycle is Curtis most likely in?
Question 5 Jack and Jill are 41 years old
and plan on retiring at age 65 and expect to live until age 95. They currently
earn $200,000 and expect to need $100,000 in retirement. They also expect that Social
Security will provide $24,000 of benefits in today’s dollars at age 65. They
are saving $20,000 each in their 401(k) plans and IRAs. Their son, Parker, is
expected to go to college in 10 years. They want to save for Parker’s college
education, which they expect will cost $25,000 in today’s dollars, and they are
willing to fund 4 years of college. They were told that college costs are
increasing at 6% per year, while general inflation is 3%. They currently have
$500,000 saved in total, and they are averaging an 8% rate of return and expect
to continue to earn the same return over time. Based on this information, what
should they do?
Question 6 Lori is an assistant to a patent
lawyer and earns $40,000. She pays $500 per month on her mortgage, her homeowners
insurance is $2,000 per year, her taxes are $2,000, her utilities are $5,000
per year and she pays $4,000 in credit card bills each year. Her housing ratio
1 is equal to 37.5%.
Question 7 Mark and Caren are 36 years old; they plan on retiring at age 62 and expect to live until age 95.
They currently earn $250,000 and expect to need $200,000 in retirement. They
also expect that Social Security will provide $40,000 of benefits in today’s
dollars at age 62. They are saving $15,000 each in their 401(k) plans and just
had a baby boy they named Albert Rufus or AR for short. They want to save for
AR’s college education, which they expect will cost $20,000 in today’s dollars,
and they are willing to fund 4 years of college. They were told that college
costs are increasing at 7% per year, while general inflation is 3%. They
currently have $150,000 saved in each of their 401(k) plans, and they are
averaging a 9% rate of return and expect to continue to earn the same return
over time. Based on this information, what should they do?
Question 8 Utilizing the three panel
approach, which of the following would be evaluated in Panel 1 – Risk
Management?
Question 9 CJ bought the following assets
this year. Which of these purchases would be considered “bad debt?”
Question 10 Robin met with you recently to
make some changes to her insurance needs. You have made several
recommendations. Which of these recommendations will have a positive cash flow
impact from an insurance perspective?
Question 11 Your client, Tom, asked you to
prepare his financial statements. He believes that his wife is the root of all
of their financial problems because of her spending habits. His wife, on the
other hand, believes that most of their money goes to pay routine expenses
like, house, auto, etc. Which financial statement will help them resolve this
disagreement?
Question 12 Craig’s financial planner is
preparing his balance sheet. Which of the following would be considered an
“investment asset?”
Question 13 Adriana is an analyst at High Tech
Hedge (HTH) where she earns $150,000 base salary with a bonus of $50,000. HTH
sponsors a profitsharing plan with a 401(k) feature and provides for a dollar
for dollar match up to 3% of compensation. Her account had $10,000 of capital
gains this year and dividends of $5,000. She defers $15,000 into the 401(k)
plan. The employer made no additional contribution to the profit sharing plan.
What is her savings rate this year?
Question 14 David, 33 years of age, and
Kristina, 34 years of age, are married with no children. They anticipate having
children within the next five years. David and Kristina each have a graduate
degree and student loans. They both have good jobs and earn about $110,000
together. They have mortgage debt of $190,000 on their home that is valued at
$210,000. They have one car that they share that is not yet paid for, and they
anticipate buying a second car in the next year. They have no credit card debt.
Which of the following is a likely current goal of the couple?
Question 15 A client, Marie, age 35, came
into a financial planner’s office today. She provides the planner with the
following information for the upcoming year: Income $100,000 Principal and
Interest payments on home mortgage $14,000 Homeowners insurance $1,000
Property taxes $5,000 Living Expenses $40,000 Credit Card Debt Payments
$12,000 Savings $5,000 Student Loan Payments $5,000 Car Payment $6,000
When considering the targeted benchmarks, which of the following statements is
the planner most likely to make during the next meeting?
· Question 1
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A
financial planner is currently preparing a client’s cash flow statement.
Which of the following would the planner classify as a financing activity?
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· Question 2
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Natalie and Brian visited your office today. They
are both in their early 30s and have two children with another one on the
way. During your meeting, they provide you with the following financial
information.
Gross Income per Year - $150,000 Housing Costs per Year (P & I and T & I) - $24,000 Other Debt Payments per Year - $50,000 Total Assets – $300,000 Total Debt – $200,000 Which of the following is true? |
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· Question 3
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Curtis
is 60 years old. He plans to retire in five years. He has amassed a net worth
of $1,500,000 which he expects will sustain him during retirement. He is
divorced with two adult independent children. Which phase of the life cycle
is Curtis most likely in?
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· Question 4
|
Jack
and Jill are 41 years old and plan on retiring at age 65 and expect to live
until age 95. They currently earn $200,000 and expect to need $100,000 in
retirement. They also expect that Social Security will provide $24,000 of
benefits in today’s dollars at age 65. They are saving $20,000 each in their
401(k) plans and IRAs. Their son, Parker, is expected to go to college in 10
years. They want to save for Parker’s college education, which they expect
will cost $25,000 in today’s dollars, and they are willing to fund 4 years of
college. They were told that college costs are increasing at 6% per year,
while general inflation is 3%. They currently have $500,000 saved in total,
and they are averaging an 8% rate of return and expect to continue to earn
the same return over time. Based on this information, what should they do?
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· Question 5
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Nathan
and Evan (two brothers) are joint property owners. Nathan owns 60% and Evan
owns 40%. How is this property owned?
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· Question 6
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Craig’s
financial planner is preparing his balance sheet. Which of the following
would not generally be considered “cash and cash equivalents?”
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· Question 7
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You
currently manage Cody’s investment portfolio. He provided you with the
following information for the beginning and the end of the year.
Investment Balance (beginning of the year) - $100,000 Investment Balance (end of the year) - $115,000 IRA Balance (beginning of the year) - $75,000 IRA Balance (end of the year) - $82,000 Net Worth (beginning of the year) - $1,000,000 Net Worth (end of the year) - $970,000 Annual Savings to IRA - $5,000 Which of the following statements is correct? |
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· Question 8
|
With the life cycle approach, a client can only be in one
of the three phases at a specific time.
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· Question 9
|
During
your work with your new client, Brian, you created several visual
representations of how your client spends his money. Which approach to
financial planning are you utilizing?
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· Question 10
|
Utilizing
the three panel approach, which of the following would be evaluated in Panel
1 – Risk Management?
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· Question 11
|
A
client, Marie, age 35, came into a financial planner’s office today. She
provides the planner with the following information for the upcoming year:
Income - $100,000 Principal and Interest payments on home mortgage - $14,000 Homeowners insurance - $1,000 Property taxes - $5,000 Living Expenses - $40,000 Credit Card Debt Payments - $12,000 Savings - $5,000 Student Loan Payments - $5,000 Car Payment - $6,000 When considering the targeted benchmarks, which of the following statements is the planner most likely to make during the next meeting? |
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· Question 12
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CJ
bought the following assets this year. Which of these purchases would be
considered “bad debt?”
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· Question 13
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Which
of the following statements concerning income and expenses listed on the
Income Statement is correct?
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· Question 14
|
Your
new client, Kerri, age 35, came into your office today. She provided you with
the following information for the year.
Income - $100,000 Taxes - $18,000 Rent - $14,000 Living Expenses - $40,000 Credit Card Debt - $12,000 Savings - $5,000 Student Loan Payments - $5,000 Car Payment - $6,000 After receiving this information, you created a pie chart to visually depict where her income was spent. Utilizing targeted benchmarks, which of the following statements are you most likely to make during you next meeting? |
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· Question 15
|
Your
client, Tom, asked you to prepare his financial statements. He believes that
his wife is the root of all of their financial problems because of her
spending habits. His wife, on the other hand, believes that most of their
money goes to pay routine expenses like, house, auto, etc. Which financial
statement will help them resolve this disagreement?
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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
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?
During your work with your new client,
Brian, you created several visual representations of how your clients spends
his money. Which approach to financial planning are you utilizing?
Paul and Lucy Martin are married and both
are 65 years of age. Paul is retired from the military and receives a military
pension as well as disability benefits from an injury he sustained during the
Vietnam War. Lucy is a retired nurse. Lucy is fairly health, although she is
borderline diabetic. Paul is diabetic and had a triple bypass several years
ago. He also has extensive hearing loss in one ear that he sustained during his
military service. Both have a family history of Alzheimer’s disease. Their home
is paid for and they just purchased a new car with financing. They have three
self sufficient adult children and two grandchildren. The Martins have a life insurance
policy on each of their adult children they purchased when the children were
young with a death benefit of $10,000. All three policies have a cash value of
$3,000 each. They also have policies on each other with a death benefits of
$100,000. The Martins live comfortably with their pensions but do not have each
other with a death benefit of $100,000. The Martins live comfortably with their
pensions but do not have a lavish lifestyle or high net worth. Which of the
following is their most important need/goal?
You have been working with your client, Brenda,
for 3 months now. You developed a mission statement, goals, and objectives with
the client. You are now constructing a plan that is led by the client’s mission
statement. Which approach to financial planning are you utilizing?
Rachel is 30 years old and single. She is
healthy, has no children or pets. Rachel works as a human resources coordinator
and earns approximately $40,000 per year. Due to her outstanding student loans,
she has a fairly low net worth. She rents an apartment but does own her car
outright. All of the following are likely insurance coverage needs, except?
Darrin and Kathi are both 44 years of age. The
came to your office today and provided the following financial information:
Cash and Cash Equivalents - $333,333
Investment Assets - $333,333
Personal Use Assets - #333,333
Current Liabilities - $100,000
Long-Term Liabilities - $250,000
After meeting with them you created a pie
chart to visually depict their current balance sheet. Utilizing targeted
benchmarks, which of the following statements are you most likely to make
during you next meeting?
Ronnie visited
your office today. He is 55 years of age. He is divorced and has two children.
One child recently graduated from college and the other child is just entering
into high school. Ronnie earns $350,000 a year as the operator of a very
specific type of medical equipment. There are only two of these particular
machines in existence. He has provided you the following financial information.
Cash and Cash
Equivalents - $100,000
Annual
Non-Discretionary Expenses - $300,000
Which of the
following is true?
Candice earns $85,000 working as an
administrative assistant in a public company based in New York. The company
provides a matching contribution in the 401(k) plan of 50% up to a maximum
contribution of 4% of compensation. Her 401(k) plan account had $20,000 in it
at the beginning of the year. She contributed $5,000 to the plan this year and
the employer made the matching contribution before year end. The ending balance
of the account is $30,000. What is her savings rate this year?
Janice earns $85,000 working as an
administrative assistant in a public company based in New York. The company
provides a matching contribution in the 401(k) plan of 50% up to a maximum
contribution of 4% of compensation. Her 401(k) plan account had $20,000 in it
at the beginning of the year. She contributed $5,000 to the plan this year and
the employer made the matching contribution before year end. The ending balance
of the account is $30,000. What is her return on her investments this year for
the 401(k) account?
Your client, Meg, asked you several
questions about her balance sheet. She doesn’t understand how the assets,
liabilities and net worth are related. Which of the following statements is
true?
Craig’s financial planner is preparing his
balance sheet. Which of the following would not generally be considered “cash
and cash equivalents?”
Roger and Julie are married. Roger is a
police officer and earns $50,000 per year. He contributes 10% of his salary to
his retirement plan. His employer also makes a 5% match contribution. Julie
stays at home with their children and contributes $5,000 to an IRA. What is
their total saving rate?
While meeting with your new client about this
retirement needs you have made several assumptions regarding income growth,
savings rate, inflation rates, and investment return. You engage is the process
of changing some of the key assumptions to determine the overall impact of
those changes on the financial plan. What is this process called?
Curtis
is 60 years old. He plans to retire in 5 years. He has amassed a net worth of
$1,500,000 which he expects will sustain him during retirement. He is divorced
with two adult independent children. Which phase of the life cycle is Curtis
most likely inDavid is 33 years of age, Kristina, 34 years of age, are married
with no children. They anticipate having children within the next five years.
David and Kristine both have a graduate degree and student loans. They both
have good jobs and earn about $110,000 together. They have mortgage debt of
$190,000 on their home that is valued at $210,000. They have one car that they
share that is not yet paid for and they anticipate buying a second car in the
next year. They have no credit card debt. Which of the following is a likely
current goal of the couple
What do
the three panels of the three panel approach cover
Capital
gains, dividends, interest and other portfolio income should not be part of
The
client's life phase helps to understand their
Financial
statement and ratio analysis approach uses four types of financial ratios
Liquidity
Ratio-Emergency Fund Ratio formula
The
planner and client should mutually define the client's
The
planner must collect and analyze
The
planner must keep the client's
While
meeting with your new client about his retirement needs you have made several
assumptions regarding income growth, savings rate, inflation rates, and
investment returns. You engage in the process of changing some of the key
assumptions to determine the overall impact of those changes on the financial
plan. What is this process called?
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