Financial Planning Midterm
This is the midterm I used a few years ago. If I get enough inquiries, I'll
provide the answers. Just recognize this ain't no simple exam
1. A retirement budget shows needed assets. What are three issues the retiree
might consider to maintain lifestyle.
2. Assume stocks return 13%, bonds at 9% and T-bills at 7%, determine the
overall projected return on a portfolio of 62% Stocks, 30% Bonds and 8% T-Bills
3. A couple refinance a Second home for $100,000 over 15 years. They pay
3 points. Amount of points written off the first year =
4. An investor has a long term gain of $144,000; long term losses of $156,000 already booked in 1996. He has also has a potential short term loss of $76,000 and a $75,000 short term gain on securities he may or may not sell. If he does sell everything, what is the taxable result. What else might he do.
5. Define asset allocation.
6.. Define and comment on Unsystematic Risk
7. Why might a planner have to determine a clients goals rather than the client.
8. Describe a callable bond and the associated risk
9. Couple is in the 33% tax bracket. They have a municipal bond paying 6.76%. What must a "comparable" corporate bond yield
10. A husband's employer has a pension fund, the wife's employer does not. Their AGI is $45,000 and they put $4,000 into the IRA. How much is deductible.
11. Describe a wrap account and any particular problems associated with them
12. A single man has a AGI of $22,300. Muni bond interest is $5,500 and social security payments are $9,000. How much income is taxed.
13. A person is buying a home and will get either a 30 year loan at $400,000 at 8 1/2% or a 15 year loan at 8%. What issues should he consider. Show numbers
14. Explain fiduciary obligation
15.. Describe two problems with GNMA's.
16. What is the problem with buying a new issue closed end fund. It is similar to __________________?
17. Define a captive agent and describe a problem associated with using one.
18.Describe dollar cost averaging and at least one inherent problem.
19. At age 40, an individual's retirement budget is estimated to be $40,000. If a budget would grow at 5% till normal retirement at age 65, what is new budget. If investments would grow at 10% to death at age 85 and inflation was 6%, what is the amount of the "kitty" needed?
20. Describe a 12b-1 plan
21. There are several methods used to sell and compute the taxation on the sale of stocks or mutual funds. What is the best and explain.
22. A stock has a past history of returning 12% annually. It's standard deviation is 11%. What might the investor expect?
23. Interest rates are scheduled to change up. You still want to use a corporate bond fund. What kind (or what must be considered)
24. Define Beta
25. Define alpha
How do you think you did? Yes, it is true that 70% was a passing grade. But would you feel comfortable using someone that only got a C-?