MU - S1 2000 - Personal Financial Planning

MU - S1 2000 - Personal Financial Planning - MONASH...

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: MONASH UNIVERSITY LIBRARY | |||l1|l ll 004091 498 Monash University Semester One Examinations 2000 7 Faculty of Business and Economics Department of Accounting and Finance EXAM CODES: AFF3111 TITLE OF PAPER: PERSONAL FINANCIAL PLANNING EXAM DURATION: 3 Hours READING TM: 10 Minutes THIS PAPER IS F OR STUDENTS STUDYINGA T: (office use only a— tick where applicable) Berwick [3 Clayton El Peninsula [Z] Distance Education U Open Learning EJ Caulfield Gippsland El Sunway El Enhancement Studies Cl Other (specify) El 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 OPEN BOOK SPECIFICALLY PERMITTED ITEMS if yes, items permitted are: This paper consists of Seven (7) questions printed on Four (4) pages. PLEASE CHECK BEFORE COMMENCING. This is 3. FINAL paper. The total number of marks available in the examination is 70. 00421|e.doc OFFICE USE ONLY In ff 9;) as I: AFF3111 PERSONAL FINANQIAL . a Answer the following question in the answer booklet provided by writing the Question Number, the part (a—j) i and the nominated answer. Select the response that you feel best answers the question asked. Question 1 (a) If interest rates move down, the unit price of a Fixed Interest Managed Trust should: (i) decrease (ii) remain the same (iii) increase (iv) none of the above (13) Of the following list of items, which does not apply to a complying annuity? (i) Must be payable for the lifetime of the annuitant (ii) Payments must be indexed by the AWOTE (iii) No commutation allowed after 6 months from cemmencement (iv) Cannot be used as security for borrowing (c) A person who dies intestate has: (i) died prior to the death of his/her spouse (ii) died in a State other than their home State (iii) died without leaving a written will (iv) died without appointing an executor (d) Unavoidable losses of low frequency and high severity can best be managed by (i) risk avoidance (ii) risk retention (iii) risk transfer (iv) risk control (6) Assessable income may not include: (i) dividends received (ii) capital gains realised (iii) commissions received (iv) lottery winnings (t) A life policy which has no savings element or cash value is: (i) Term insurance (ii) Whole of life insurance (iii) Endowment insurance (iv) An annuity (g) The tax on the pre-July 1983 component of an ETP is: (i) 5 per cent of the total amount taxed at the marginal rate (ii) 5 per cent (iii) tax at the marginal rate (iv) 15 per cent (h) Which of the following is not an appropriate phase of the goal setting procedure? (i) Setting short-term goals (ii) Setting long—term goals (iii) Assessing top priorities (iv) Ignoring the possibility of death where the client is young 004211e.doc Page 2 of 4 L. , ,u «a ~"_ OFIC USE ONLY '- [$1331 1 1 PERSONAL FINANCIAL PLANNING (i) Which of the following is not an example of personal insurance cover? (i) Private health insurance (ii) General insurance (iii) Term insurance (iv) Disability insurance (j) The stage of the business cycle marked by increased consumer confidence and increased investment expenditure, higher wages and prices and rising levels of employment is: (i) Boom (ii) Recovery (iii) Contraction (iv) Recession (10 X l = 10 marks) Question 2 During the presentation of her financial plan Pansy Lancox asked the financial planner whether a managed fund being recommended was superior to a similar fund named by Pansy. The financial planner has detailed knowledge about the product being recommended, but does not know the client’s product well, and has heard that the management body does not have a good reputation. How shOuld the financial planner handle the question asked? (8 marks) Question 3 A new client who has just received a windfall inheritance has approached you for advice on the investment of the money. He is keen to purchase shares as he has read that the share market is creating instant millionaires from the new technology floats that have occurred. List the factors that you should explain to your client regarding the undertaking of any investment in the equity market. (10 marks) Question 4 (a) Describe the characteristics of Defined-benefit Fund and Accumulation Fund superannuation schemes, indicating circumstances in which one might be preferred to the other. (b) What is the Superannuation Guarantee Charge? (0) A self—employed client has made a contribution to superannuation for the 1998-99 tax year of $25,000. Calculate the amount of tax deduction that may be claimed on the contribution. (4+3+3=10marks) Question 5 (a) Describe the Incomes Test and Assets Test. Which is the more important, and why? (b) Using an example, explain what is meant by deeming. (c) Why is it important to have a valid will? (6+4+4= 14 marks) 004211eidoc Page 3 of 4 OFFICE USE ONLY I AFF3111 PERSONAL FINANCIAL PLANNING I Questim (a) You are considering investing in a rental apartment in the city area, and have been advised that the ". current capitalisation rate for the area is 6.4%. If the property you are investigating has an income of 4' $7,500 per annum and outgoings of $1,500, calculate the price you should pay to buy the unit. .‘I (b) An investor on a marginal tax rate of 45%, requires an after tax real rate of return totalling 4%. If the current inflation rate is 2%, what earning rate must the investment have to meet your client’s requirements. (0) A property insured for $84,000 has a true value of $120,000. If a loss of $30,000 occurs, how much will be the finai payout? (3+3+3=9marks) Question 7 A client seeks your advice on the appropriate amount of life insurance required for himself, his wife and two primary school-age children. (a) Caiculate the amounts for A, C and D for the needs anabzsis below: Note: be sure to write your answers in the exam script. ' was amass .. . Insure —_ — mortgage 3 _ 0:000 — personal loans 10,000 3,000 " — ’ other '" — _:— —_ — .—_ . Amount needed to clear debt B. Living requireents per annu 36,000 N N 0 Capital requirements <% M) D. Total insurance required (b) List any further information you would require to assist in the calculation of insurance required. :‘4 ' A. (c) What forms of insurance would you recommend your client purchase? (3+3+3=9marks) 0042ile.doc Page 4 of 4 ...
View Full Document

Page1 / 4

MU - S1 2000 - Personal Financial Planning - MONASH...

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