Financial Planning and Insurance St.udy Gu.ide (FINANCE390)
Exam (elaborations)
Exam (elaborations) Financial Planning and Insurance Study Guide (FINANCE390)
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Course
Financial Planning and Insurance St.udy Gu.ide (FINANCE390)
Institution
Rutgers, The State University Of New Jersey
Exam (elaborations) Financial Planning and Insurance Study Guide (FINANCE390) Questions answered
1. A good financial planning report must include an analysis of all of the following EXCEPT:
a. Where you are now
b. Where you want to be
c. Why you failed previously
d. How to reach your goals...
Financial Planning and Insurance St.udy Gu.ide (FINANCE390)
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Financial Planning and Insurance Study Guide with
answers
1. A good financial planning report must include an analysis of all of the following EXCEPT:
a. Where you are now
b. Where you want to be
c. Why you failed previously
d. How to reach your goals
2. The five steps in the financial management process outlined by the authors include the
following EXCEPT:
a. Establish goals
b. Collect data
c. Measure performance
d. Establish living wills
3. Match the terms in column A with the description in column B.
A B
a. Risk management 1. Boosts investment return by deferring
taxes
b. Marketability of borrowing 2. Earning rate of return greater than the cost
c. Liquidity 3. Protecting ground gained without giving up
much in return
d. Tax leverage 4. Irrevocable life insurance trust
e. Estate freeze 5. Ability to turn investment quickly into cash
with little or no loss
f. Estate tax-free wealth transfer 6. Ability to quickly dispose of an investment
g. Leverage 7. Transfer asset growth to next generation
4. Which of the following is NOT part of the definition of an Investment Advisor as defined
by the Investment Advisers Act of 1940 (the Act)?
a. provides advice regarding securities
b. is in the business of providing advice
c. holds a CFP® or series 7 license
d. receives compensation for advice
, Financial Planning and Insurance Study Guide with
answers
5. The Act defines compensation as
a. Commission only
b. Fees only
c. Receipt of any economic benefit
d. 12(b) 1 fees only.
6. Which of the following is NOT exempt from the definition of an investment advisor?
a. Publisher of the local newspaper, the Daily Beagle
b. Insurance agent who advises clients about no load mutual funds
c. Those who advise clients solely about U.S. treasury obligations
d. Local attorney who occasionally advises clients about setting up investment
accounts for their jury awards
7. The “brochure rule” requires that the investment adviser do which of the following?
a. Provide the client with an audited financial statement of the adviser’s net worth.
b. Deliver a written disclosure document (such as part II of form ADV) to each
client
c. Provide a copy of part I of form ADV to each client
d. Provide clients with copies of the adviser’s marketing brochure.
8. The anti-fraud provisions of the Act applies to:
a. All investment advisors, even those who are exempt from registration
b. Only those who must register with the SEC or the states
c. Only situations where security transactions take place.
d. Only advisors of pension plans
9. Which of the following statements about the definition of “security” under the Investment
Advisor Act is CORRECT?
a. The act defines the term “security” in the broadest possible fashion
b. The act defines the term narrowly, to include only stocks, bonds and certificates of
deposit
c. The SEC periodically holds hearings to define the term
d. The definition is left to the NASD
10. Financial advisor John Smith manages investment accounts for clients mostly in his
home state of Ohio. He should register with the Ohio division of securities if:
a. He has any clients outside Ohio
b. The assets under his management exceed 30 million
c. Assets under his management are less than 25 million
d. He is not a CFP® certificant
, Financial Planning and Insurance Study Guide with
answers
11. If John Smith is registered as an investment advisor with the SEC, which of the following
designations is permitted under the Act?
a. John Smith, RIA
b. John Smith, certified RIA
c. John Smith, Investment Counsel
d. John Smith, Registered Investment Advisor
12. Recent rules issued by the SEC require investment advisors to do the following
EXCEPT:
a. Adopt a code of ethics
b. Designate a chief compliance officer
c. Adopt policies for disaster recovery
d. Accept only U.S. citizens as clients
13. The following are the disciplinary actions that the CFP Board may take against a
financial advisor who is in violation of the Code of Ethics EXCEPT:
a. Private censure
b Lawsuit against the advisor in Federal Court
c. Public letter of admonition
d. Suspension
14. Which of the following uses of the CFP® marks are PROHIBITED by the CFP Board?
a. Jane Smith is a CFP® graduate
b. Jane Smith is a CFP®
c. Jane Smith has a CFP®
d. All of the above
15. Which of the following are PROHIBITED uses of the CFP® marks?
a. www. CFP Advisors.com
b. CFP Advisors, Inc.
c. All Star CFPs, Inc.
d. All of the above
16. Under the CFP Board’s Code of Conduct and Professional Responsibility, a financial
planner who has reason to suspect illegal conduct in his or her organization must:
a. Disclose the information to his or her supervisor
b. Alert regulatory authorities if the organization does not take suitable action to remedy
the situation
c. Not use the process to harass another planner
d. All of the above
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