MU - S2 2001 - Personal Financial Planning

MU - S2 2001 - Personal Financial Planning - we ll ll ll l...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: we ll ll ll l Ml 0040894 84 f‘OFFICE use ONLY 6,» Monash University Semester Two Examinations 2001 Faculty of Business and Economics Department of Accounting and Finance EXAM CODES: AFF3111 TITLE OF PAPER: PERSONAL FINANCIAL PLANNING EXAM DURATION: 3 Hours READING TIME: 10 Minutes THIS PAPER IS FOR STUDENTS ST UDYINGAT: (office use only — tick where applicable) El Clayton El Peninsula Gippsland El Berwick El Distance Education Caulfield El Open Learning [3 Sunway U Enhancement Studies B Other (specify) D Candidates are reminded that they should have no material on their desks unless their use has been specifically permitted by the following instructions. AUTHORISED MATERIALS CALCULATORS YES E NO D OPEN BOOK YES Ci NO I?! SPECIFICALLY PERMITTED ITEMS YES El NO 121 if yes, items permitted are: This paper consists of Seven (7) questions printed on Four (4) pages. PLEASE CHECK BEFORE COMMENCING. This is a FINAL paper. The total number of marks available in the examination is 70. IOSZOLE Page i of 4 4h; 1 _ MONASH UNIVERSITY LIBRARY AFF3 1 OFFICE USE ONLY II 11 PERSONAL FINANCIAL PLANNING Answer the following question in the answer booklet provided by writing the Question Number, the part (a~j) and the nominated answer. Select the response that you feel best answers the question asked. Question 1 (a) The Superannuation Guarantee Charge currently requires the following contribution rates from employers: (i) 6% (ii) 8% (iii) 9% (iv) 12% (b) The builder of a large submban office complex has been advised to set up a publicly listed trust to entice individual investors to subscribe for units. The type of trust to be established would be: (i) a Mortgage Trust (ii) a Property Trust (iii) an Equity Trust (iv) a Cash Management Trust (c) An active fund manager may adopt a top-down approach in analysing fimdarnental factors that are believed to influence share prices. This approach will: (i) identify specific firms for inclusion in an investment portfolio. (ii) provide a measure of the level of unsystematic risk in the market. (iii) compare the performance of firms through financial ratio analysis. (iv) identify future economic factors that may impact industry sector performance. (d) A superannuation scheme accumulation fund is a fund where: (i) the final payout benefit is provided to the member on joining the fund. (ii) the final payout benefit depends upon the performance of the fund. (iii) payout is specified under the Superannuation Guarantee Legislation. (iv) the benefit is paid in the form of a lifetime annuity. (e) Which of the following items would a financial planner not consider when completing a plan for a client? (i) changing circumstances (ii) actions and strategies (iii) marketing of services (iv) disclosure 10820LE Page 2 of 4 OFFICE USE ONLY II AFF3111 PERSONAL FINANCIAL PLANNING The Australian economy is best described as: (a) a command economy; (b) a socialist economy; (c) a capitalist economy; ((1) a mixed economy. If investing for a client a substantial sum of money that will require to be withdrawn in a short time frame, a financial planner may choose to deposit the funds in: (a) a ten year government bond. (b) a ten year friendly society bond. (c) a piece of real estate. ((1) i a portfolio of shares. A taxpayer who receives a franked dividend: (a) does not have to report dividend income. (b) receives a tax credit of 50 per cent of the dividend. (c) reports only 50 per cent of the dividend income. ((1) receives a tax credit equal to the rate of the company tax paid. Where an asset is bequeathed to a charity under a will, capital gains tax: (a) is not payable. (b) is payable only if the asset is later sold. (c) is payable at the rate of 50 per cent of the profit made. ((1) is payable by the estate of the deceased. Taxable income for the year may be reduced by: (a) deferring the payment of deductible expenses. (b) bringing forward assessable income. (c) reducing rebateable items. (d) diverting income to other taxable entities. (10 x 1 = 10 marks) Question 2 To be valid, a will must be prepared on a special form. Explain whether you agree or disagree with this statement. (8 marks) 10820LE OFFICE USE ONLY II Question 3 . AFF3111 PERSONAL FINANCIAL PLANNING Economic indicators are used to help identify where the economy is positioned in relation to the current business cycle. Describe the types of indicators that may be used in assessing the economic situation, and name one indicator as an example of each type. (3 x 4 = 12 marks) Question 4 Explain the difference between a “securities dealer” and an “investment advisor”, with particular reference to the legal requirements for each. (6 marks) Question 5 (a) Your client has current debts of $l24,500, current assets of $30,500, and requires $28,000 per annum for living expenses. Calculate the total amount of life insurance that is required to fully cover your client if the current earning rate on investments is 7%. (b) You have received a dividend cheque for an amount of $1 ,325. If the dividend payment is fully franked at a corporate tax level of 30%, and your marginal tax rate is 45%, calculate the amount of extra income tax that you must pay. (c) A single pensioner client has the following assets — principal residence $145,000, a holiday home $75,000 rented at $95 per week, units in a property trust $55,000 earning 7%, and shares in Telstra $20,000 paying a dividend of $1,800 per year. Calculate the amount of deemed income that would be included in the aged pension income test. (3 x 3 = 9 marks) Question 6 A married couple in their forties have just received a windfall inheritance, and have approached you to develop a portfolio of investments that will generate a high level of wealth for them to live on in their retirement. They are reluctant to invest in the equity market as they have read that the value of equity investments can fall dramatically overnight. Explain to your clients the type of investment portfolio that would be appropriate for them to achieve their objective. (10 marks) \ Question ‘7 You have been employed as a newly qualified financial planner and asked to design a training course for the firm’s para-planners. List and explain each of the elements required in the construction of a good financial plan. (15 marks) IOSZOLE Page 4 of 4 ...
View Full Document

Page1 / 4

MU - S2 2001 - Personal Financial Planning - we ll ll ll l...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online