General Financial Principles

John and Darcy have three college age children, Brooke, Elizabeth, and Braden. Which of the following statements is(are) correct regarding the rules if two or more children in the same household incur qualified education expenses in the same year?

1) The parents may claim a Lifetime Learning Credit for the entire family. 2)An American Opportunity Tax Credit may be claimed for each child.

Francis asks her CFP® practitioner, John, about drafting a will and trust for the benefit of her children and grandchildren. John is not an attorney and has limited expertise in the area of estate planning. He provides Francis with a recommendation to a local attorney who specializes in the area of elder law. John has acted in accordance with which of the following Principles?

Competence

Which of the following interest rates is (are) controlled by the Federal Reserve Board in the exercise of its monetary policy?

Discount rate.

Ian, a CFP® certificant, works for a financial advisory firm that solely provides proprietary products and services. He discovers that his potential client needs a product that is not offered by his firm. However, Ian attempts to convince the prospective client to accept his recommendation and purchase a product from his firm. Which of the following Principles has Ian violated?

Fairness

Which term refers to the taxation, expenditures, and debt management of the federal government?

Fiscal Policy

Julie, a recently retired account executive, has accumulated a large amount of employer stock with a very low cost basis. She is concerned that a large portion of her wealth is positioned in one holding. In addition, she would like to donate a portion of her assets to a specific children's charity throughout the remainder of her life. She has set up a meeting with Jack, a CFP® professional, to discuss the planning choices regarding the stock. Up to this point in his career, Jack has focused primarily on college planning for young couples and he does not feel adequately prepared to assist Julie. However, Jack knows she is wealthy and he really wants to obtain her business. How should Jack proceed?

Jack should ask Julie for permission to consult with a more experienced advisor within his firm.

Which of the following types of goods would typically exhibit the highest price elasticity?

Jewelry

Which of the following credits is available for all years of postsecondary education even when not pursuing a degree or credential?

Lifetime Learning Credit

Julio is planning on refinancing his mortgage with a local bank. While meeting with his banker he is given a loan packet detailing the amount to be financed, the annual percentage rate, and the loan's terms and conditions. What act requires the bank to disclose this information to Julio?

The Consumer Credit Protection Act

Jason is delinquent on a number of credit cards. He is concerned that these creditors will start to use scare tactics in order to embarrass and humiliate him until he pays the debts. What act prevents creditors from unnecessarily harassing Jason about his debts?

The Fair Debt Collection Practices Act

Which of the following statements regarding the income tax deduction for student loan interest is (are) CORRECT?

The deduction is subject to phaseout based on the taxpayer's adjusted gross income.

All of the following statements regarding the provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the 2005 Bankruptcy Act) are correct EXCEPT:

people who have the ability to pay their debts can choose between filing under Chapter 7 or filing under Chapter 13.

CFP Board requires that a written agreement be provided to clients by a CFP® certificant or his employer if a certificant provides financial planning or material elements of the financial planning process to a client. Required elements of this written agreement include all of the following EXCEPT:

terms under which the certificant will use other entities to meet any of the agreement's obligations.

All of the following statements regarding college savings plans as education savings techniques are correct EXCEPT:

they usually do not allow the child to attend an out-of-state university.