PFP

Your client has an annual income of $90,000. Her fixed payments follow: auto loan debt ($450 per month), mortgage principal and interest ($1,950 per month), home insurance premium ($100 per month), auto insurance premium ($150 per month), property taxes ($4,800 per year) and payroll FICA taxes ($542 per month). What is her housing ratio?

(12*1950)/90000

At what stage in the strategic planning process would you talk with the client about specific product disclosures and alternative planning strategies?

Communicating the recommendations

what are the four elements to emotional intelligence

awareness of others relationship building self-awareness self-regulations

How often is your client entitled to receive a free copy of their credit report from each of the three national credit rating agencies, based on the Fair and Accurate Credit Transactions Act of 2003?

once every year

The Securities Act of 1934

required registration of all securities offered on national exchanges, including annual reports, and registration of broker-dealers. It also created the Securities and Exchange Commission (SEC)

The Securities Act of 1933

required the registration of new securities, including full disclosure and a prospectus. It also made securities fraud a crime.

All but one of the following reasons support the effort to become a more culturally-competent adviser. Which of the following is NOT a valid reason? -A planner's unconscious beliefs or generalizations about a culture might bias their planning work. -Marriage and remarriage generally has cultural implications. -A client's non-negotiable values are generally consistent across cultures. -Lack of cultural awareness leads to poor communication dynamics. -Culture influences the client's beliefs and attitudes about money and risk.

-A client's non-negotiable values are generally consistent across cultures.

Your clients want to take tax-free withdrawals to pay for education expenses. Which of the following withdrawals would NOT qualify for a tax-free withdrawal but would be taxed as ordinary income? -$15,800 withdrawal from a Coverdell ESA to pay for tuition at private high school -$1,200 withdrawal from a Coverdell ESA to pay for class textbooks -$8,400 withdrawal from a US Savings Bond to pay for a computer used at school -$5,500 withdrawal from a 529 Savings Plan to pay for room and board at school

-$8,400 withdrawal from a US Savings Bond to pay for a computer used at school

Luke and Patty are new planning clients. They own a small condominium near by their work. Both are employed and like to travel when they have time off of work. They have a number of important life goals; however, they currently lack sufficient discretionary income to fund them. In fact, they've run up some balances on their credit cards and both have outstanding school loans. Patty is intent on buying a new car. Luke wants to plan a trip for the two of them to Belize. Which of the following actions would be most appropriate in getting them started on achieving their goals? -Tell them that the trip and car are out of the question since there isn't sufficient income to accomplish everything. -Recommend that they apply for a zero-interest, 12-month credit card so that they can take that trip to Belize -Acknowledge their spending intentions and talk about the consequences of those actions in respect to their life goals -Suggest selling the condo and using the funds to achieve their spending goals and to rent an apartment

-Acknowledge their spending intentions and talk about the consequences of those actions in respect to their life goals

Which of the following is the most appropriate response to client resistance once you recognize it during the client-planner meeting? -Lead the conversation in a different direction -Make a note and then address it in the next meeting -Bring the issue up immediately before moving forward with the agenda -Address the issue in private after the other agenda items are covered

-Bring the issue up immediately before moving forward with the agenda

List five client and/or planner assumptions that will be needed in order to calculate the education savings need?

-Child's data, including years until the start of school and number of children -Parent's goals regarding the type of school (private or public), and funding goal (e.g., full or partial funding, what costs to cover, undergrad and/or graduate school) -Economic assumptions including current cost of education at targeted schools, education and CPI inflation rates, and pre- and post-start of school reinvestment rate on portfolio holdings. -Current savings that are targeted for funding

In class, we discussed the tax benefit coordination rules regarding "no double tax benefit." Which of the following would be permitted, based on the following client circumstances. -Dependent child enrolled in freshman year at Title IV community college -Tuition and fees totaled $6,000 -Claimed full Lifetime Learning Credit of $2,000 and withdrew $6,000 from 529 on tax-free basis to pay for tuition -Claimed full American Opportunity Tax Credit, withdrew $2,000 from 529 on tax-free basis and pay $4,000 out-of-pocket -Claimed full American Opportunity Tax Credit of $2,500 and withdrew $6,000 from 529 on tax-free basis to pay for tuition -Paid the full amount out-of-pocket and claimed the full American Opportunity Tax Credit and full Lifetime Learning Credit

-Claimed full American Opportunity Tax Credit, withdrew $2,000 from 529 on tax-free basis and pay $4,000 out-of-pocket

Which of the following would be a correct entry on a Statement of Net Worth? -Face value (i.e., death benefit) of a whole life insurance policy in asset column -Sum of all contributions to the investment portfolio in the asset column -Original value of the home mortgage in the liability asset column -Fair market value of the home in the asset column

-Fair market value of the home in the asset column

The Candidate Fitness Standards are designed to ensure that the character of a candidate would not reflect adversely on the CFP® mark. All but one of the following statements would be true given that a candidate's conduct appears on the list for "presumptive bar. -"The -CFP Board would notify the individual that he or she is barred from CFP® certification. -Given that there is an appeal, the final determination would be made by the CEO of the CFP Board. -Given that the individual petitions, the Disciplinary and Ethics Commission (DEC) may deny the petition. -Given that the individual petitions, the Disciplinary and Ethics Commission (DEC) may grant the petition.

-Given that there is an appeal, the final determination would be made by the CEO of the CFP Board.

During your presentation to the client regarding life insurance recommendations, he stops you and states, "Why should I spend any of my money on life insurance? I'm young and single. I'd rather spend the money on a vacation. You don't realize how hard I've been working for the last year." Which of the following responses would least represent a suitable response based on active listening? -I hear what you are saying. You certainly deserve a vacation. My recommendation is based on a couple factors, specifically: at your age the cost will be low, the policy has a savings component that you could access and the policy would guarantee your future insurability. Would you like to look at a way that you could both go on vacation and purchase a starter policy? -Many clients immediately write-off life insurance as a product that's only appropriate for those who are older or with family. However, there are several reasons to consider purchasing a policy now. Perhaps we could just take a few moments to discuss the cost and benefit of this coverage, and then pick up the discussion during the next meeting. Does that sound OK? -Perhaps there is a way to achieve both objectives. How about if I assess your current cash and debt management plan to determine if there might be some solutions? We could continue this discussion at that time. -I double-checked with an insurance agent who is very well respected in the area, and he agreed that you definitely need to purchase a life policy. I will help you purchase the policy so that it is in place by the end of the month.

-I double-checked with an insurance agent who is very well respected in the area, and he agreed that you definitely need to purchase a life policy. I will help you purchase the policy so that it is in place by the end of the month.

Which of the following is an example of unacceptable behavior or compliance with rules of conduct that would be subject to inquiry by the CFP Board of Professional Review? -Stock selection that results in a portfolio loss - Unexpected decline in portfolio value due to market volatility - Failure to respond to the client over the weekend - Knowingly misrepresenting performance

-Knowingly misrepresenting performance

Which of the following behaviors by a financial counselor would be inappropriate, when attending to the client? -Lead back in the chair and get relaxed by crossing your legs or arms. -Be professional but casual and at ease. -Maintain eye contact as the client shares a story or when speaking to the client. -Be authentic in your conversation (i.e., unscripted dialogue).

-Lead back in the chair and get relaxed by crossing your legs or arms.

Which of the following statements regarding Federal PLUS Loans is incorrect? -The maximum PLUS loan is equal to the total cost of attendance less any other financial aid received by the student -Graduate students and professional students may qualify for a Federal PLUS loan -Parents of undergraduate, professional or graduate students may qualify for a Federal PLUS loan -Financial need is not a factor; however, an adverse credit history may impact the applicant's ability to secure the loan

-Parents of undergraduate, professional or graduate students may qualify for a Federal PLUS loan

"A CFP® professional meets with two new clients would like advice about their mortgage. In the review, the professional finds that their essential expenses exceed their income. Mortgage rates have come down significantly and they intend to refinance their current 30-year mortgage to a 15-year mortgage. Their payments will be higher than their current payment. However, they will pay off the mortgage 5 years earlier than the current amortization schedule allows. What should the professional do?" -Suggest they refinance to a 30-year fixed mortgage and begin funding savings -Suggest they refinance to the 15-year mortgage, which would reduce the amount of interest paid over the life of the loan -Suggest that they meet with their mortgage broker -Suggest they stay with their current mortgage, as the higher interest rate is tax deductible.

-Suggest they refinance to a 30-year fixed mortgage and begin funding savings

All but one of the following responses is appropriate, when active listening. Which of the following response types would generally be avoided? -Summarizing or paraphrasing response -Suggestive response -Reflecting back emotion response -Clarifying response

-Suggestive response

Which of the following statements regarding the Coverdell Educational Savings Account is correct? -Contributions to a Coverdell are tax deductible for the taxpayer. -A taxpayer can open and fund a Coverdell ESA for anyone under the age of 30. -Taxpayers may be phased out from making a Coverdell contribution. -The maximum contribution to an individual Coverdell account during the year is $2,000; however, another person could open an individual Coverdell for the same beneficiary and fund it up to $2,000 in the same year. -Assets within a Coverdell ESA can be used to fund K-12 qualified educational expenses; however, the annual withdrawal is limited to $10,000 per beneficiary

-Taxpayers may be phased out from making a Coverdell contribution.

The CFP Board requires certain client disclosures when providing financial advice. The Board requires additional disclosures when the scope of the engagement includes relevant elements of financial planning. Which of the following would specifically be required given a financial planning engagement but not required when dispersing financial advice? -Disclosure of any personal bankruptcies -Any compensation received by the planner, firm or related parties -Terms of the engagement in writing -Sales loan and advisory fees on the financial security or service

-Terms of the engagement in writing (Financial advice disclosures 1. description of the services and products 2. costs (fees, sales, loads, etc.) 3. compensation to planner, planner's firm or related parties 4. Disciplinary judgements against the planner or personal bankruptcy) (Financial planning disclosures 1-4. same 5. requirement to provide terms in the engagement letter)

All but one of the following statements correctly describes duties owed to clients (Section A). Which of the following statements is incorrect? -The CFP® professional may commingle client if records are accurately maintained and secure a loan from a client, as long as the terms of the loan are put in writing and a reasonable rate of interest is applied. -The CFP® professional must conduct due diligence before recommending another financial-service profession to the client and if used by the client, then the CFP® professional must exercise clear to protect his or her client's interests. -The CFP® professional must conduct due diligence before recommending and using software and other technology and reasonably believe that the technology is reliable and appropriate. -The CFP® professional owes any client who receives financial advice or financial planning services the duties of loyalty, care and obedience (in following reasonable and lawful client instructions).

-The CFP® professional may commingle client if records are accurately maintained and secure a loan from a client, as long as the terms of the loan are put in writing and a reasonable rate of interest is applied.

Three important client issues that need to be understood are 1) risk tolerance, 2) risk capacity and 3) risk perception. They are interconnected but not the same. Which of the following statements regarding risk tolerance is NOT correct? -The financial planning professional is in a better position to establish the client's tolerance for risk, since portfolio allocation needs to reflect the need, the time horizon and the planner's knowledge of the markets. -It's generally not enough to just take what the client tells you regarding their tolerance for volatility because that changes with market conditions. You might consider what they tell you along with their capacity to hold the volatility, their experience in holding portfolio volatility and their knowledge of financial markets. -Risk tolerance describes the level of volatility that a client is comfortable in holding within the investment portfolio (i.e., a level of risk that won't keep the client awake at night). -Risk tolerance is influenced by sociological factors and cultural upbringing.

-The financial planning professional is in a better position to establish the client's tolerance for risk, since portfolio allocation needs to reflect the need, the time horizon and the planner's knowledge of the markets.

Which of the following statements regarding a home equity line of credit (HELOC) is incorrect? -The HELOC credit amount is typically limited to 80% of the fair market value of the home less the current amount of existing debt that is collateralized by the home. -There is a draw period in which money can be withdrawn with no repayments required. -During the repayment period, no additional money can be withdrawn and the loan is fully amortized (monthly P&I payments) -The interest rate charged on the HELOC will reflect the borrower's credit score.

-There is a draw period in which money can be withdrawn with no repayments required.

Your client, Matt, is 24 years old. He began employment one year after graduation. He currently earns $42,000 per year and rooms with three of his college friends. Due to poor financial planning and excessive spending, he holds significant credit card debt. He also has an auto loan, student loan debt and a personal loan for the motorcycle that he bought second hand. Based only on the information in this question, which of the following debt repayment strategies would be available. -transfer balance on a high-cost credit card to a card offering one-year no interest -focus on paying off high-cost debt first -making one additional mortgage payment each year (13 rather than 12) -mortgage refinancing with cash out -debt consolidation with home equity loan

-focus on paying off high-cost debt first

Which of the following is a characteristic of a recessionary stage of the business cycle? -unemployment falls -manufacturing output declines -interest rates and inflation rise -housing starts recover

-manufacturing output declines

If economists see clear signs of an economic bubble, which of the following policies would you expect to see from officials who believe in Keynesian theory? -reduce income taxes, increase government spending, reduce access to credit -sell government securities in open-market operations, raise taxes and decrease federal spending -raise income taxes, decrease government spending and reduce the Federal budget -sell government securities in open-market operations, increase the bank reserve requirement and increase the discount rate

-raise income taxes, decrease government spending and reduce the Federal budget

Your friend, Randy, trades stocks with a questionable discount brokerage firm. He currently has $750,000 of securities in street name with that institution and $250,000 in a joint trading account with his son. In the event of brokerage bankruptcy or fraud, how much of that account would be insured by the Securities Investor Protection Corporation (SIPC)?

625,000 (500,000 from single account; 125,000 from joint account)

The Gross Domestic Product is made up of what economic components? (1) Household consumption (2) Business investment in machinery, construction and inventory (3) Annual stock market returns (4) Government purchases (5) Opportunity costs (6) Imports (i.e., purchases of foreign goods) (7) Net foreign expenditures (i.e., net exports)

1, 2, 4, 7

During your meeting to communicate planning recommendations to the client, you remain alert for non-verbal cues. Which of the following would suggest resistance to your planning recommendations? (1) After recommending that the client consider cutting back on discretionary spending in order to fund their retirement need, you notice that the client crosses their arms and leans back in their chair. (2) When discussing the dollar of savings that could be gained by refinancing the mortgage, you notice that the client leans forward and takes notes. (3) When pointing out that the client did not meet with the attorney to set up a trust, the client interrupts and changes the subject. (4) When covering investment planning, you recommend that the client move money from their bank account to equity mutual funds (i.e., stocks), the client's voice gets louder as he talks about how much money he lost in 2009. (5) After explaining the importance of purchasing a personal long-term disability policy, the client shares a story about her friend who was disabled for nearly a year and suffered financial hardship.

1, 3, 4

Which of the following are exempt property from creditor claims during a Chapter 7 bankruptcy? (1) Vested assets in an employer 401(k) retirement plan, regardless of portfolio value (2) IRA assets, regardless of portfolio value (3) Assets in a 529 Savings Plan, regardless of when they were contributed (4) Inherited IRA assets (5) Household furniture and appliances (6) Car, which is 10 years old and owned outright (7) Tools necessary for livelihood

1, 5, 6,7

The Investment Advisers Act of 1940 defines who is an investment adviser and what that person is required to do in respect to registration with the SEC, client disclosures and responsibilities in dealing with clients. What are the three elements that are necessary in order to be deemed an adviser under the Act? (Hint - The Investment Advisers Act specifically requires that all three elements must be present in order to be deemed an adviser; however, the terms are interpreted quite broadly.)

1. Gives specific advice about securities 2. Involved in the business of providing advice about securities 3. Receives compensation for advisory services

Which of the following types of accounts and investments are insured for bank insolvency in FDIC-member banks? 1. checking and savings account 2. mutual funds 3. money market deposit accounts 4. certificates of deposit 5. stocks and bonds 6. US Treasury securities 7. NOW accounts 8. Safety deposit box contents

1., 3., 4., 7.

Your clients are convinced that they would be better off funding a custodial account (UGMA or UTMA) rather than a 529 Savings Plan. Which of the following best support their argument? 1. Anyone can contribute to a UGMA or UTMA and the annual gift tax exclusion could be used to shelter the gift. 2. The custodial account is a good way to tax-efficiently shift assets because all gains are taxed at the child's tax rate. 3. The contributor could always change beneficiaries, if circumstances change and the child doesn't need the assets for school 4. Custodial accounts provide a broad range of investment options, often more than would be available with a 529 Plan. 5. There is no tax penalty when assets are withdrawn to pay non-educational expenses 6. Assets contributed to the custodial account are immediately removed from the donor's estate

1., 4., 5.

When can a CFP® professional, without client's consent, reveal confidential information about the client's account? 1. Never 2. To defend the CFP® professional against a charge of wrongdoing by the client 3. To comply with court orders 4. When working with another professional selected by the planner, whether or not the client approves release of information 5. To comply with a CFP Board's investigation 6. For marketing purposes

2, 3, 5

Yield curves offer important information about a particular segment of the bond market. When looking at a yield curve, what do you know are common variables of all debt securities represented by the curve? (1) each bond offers the same coupon rate (2) each bond has the same tax status (i.e., taxable or tax-exempt) (3) each bond has the same number of years to maturity (4) each bond has the same (very similar) quality rating (5) each bond was issued by the same municipality or corporation

2, 4

Which of the following statements regarding IRC Section 529 Plans are correct? 1. Taxpayers may be phased out from contributing 2. Earnings grow on a tax-deferred basis and withdrawals for qualified educational expenses are tax-free. 3. A 529 Plan can be opened by anyone but the beneficiary has to be a family member. 4. Control of the 529 stays with the owner, which means the owner can change the beneficiary to another family member of the original beneficiary 5.The annual gift tax exclusion or 5-year aggregate gift-tax exclusion can be used to shelter contributions from gift-tax liability. 6. Contributions to a 529 must end by the time the beneficiary reaches age 18. 7. 529 assets are protected from creditor alienation, subject to two-year look-back

2, 4, 5, 7

Which of the following are forms of unsecured debt? (1) Auto loan (2) Store charge card (3) Home mortgage (4) Credit card (5) Home equity line of credit (6) Overdraft protection

2, 4, 6

Open-ended questions and statements are consistently used in counseling as a way to promote client sharing. The following list includes both open- and closed-end questions and statements. Which of the following are open-ended questions or statements? (1) What is the date of your planned trip? (2) How do you picture yourself living during your 70s and 80s? (3) Is this important to you? (4) When do you expect to retire? (5) Please share with me your most regretful investment experience. (6) Why do you think you need to do that?

2, 5, 6

Your clients, Genevieve and Henry, want to know about the possibility of their child receiving financial aid. You explain that they will need to fill out a FAFSA form with their child before the deadline because that is the process for determining eligibility for federally financial aid. Which two of the following strategies would best reduce the expected family contribution resulting from FAFSA inputs and thereby increase the probability of qualifying for aid? 1. Shift assets from the parent by contributing to a UTMA custodial account 2. Purchase a permanent life policy by liquidating an investment account 3. Maximize contributions to retirement accounts leading up to start of child's school 4. Sell a bond and invest the proceeds in the parent's 529 plan, with child as beneficiary 5. Set up a 2503 Minor's Trust

2., 3.

In constructing a Statement of Cash Flows for your client, you want to organize the expenses by fixed, variable-fixed and discretionary. Which of the following are typically categorized as discretionary expenses, as opposed to fixed or variable-fixed expenses? (1) rent (2) auto loan payment (3) restaurant bills (4) utility bills (5) family travel (6) life insurance premiums (7) gas and maintenance costs (8) student loan payment

3, 5

What actions might the Federal Reserve take if they feel that the economy is rolling over into a recession? (1) Increase taxes to slow down individual spending (2) Employ fiscal constraints in order to help balance the budget (i.e., decrease government spending) (3) Lower the discount rate (4) Raise bank reserve requirements (5) Buy bonds in open market operations

3, 5

The CFP Board's Disciplinary Rules and Procedures establishes the disciplinary process afforded CFP® professionals who act in a way that establishes grounds for disciplinary investigation. Which of the following statements are accurate regarding the CFP Board's Disciplinary and Ethics Commission (DEC), the CFP Board's legal counsel and the "hearing panel?" 1. The DEC determines if there is probable cause, which would necessitate a disciplinary investigation. 2. The hearing panel consists of nine individuals, who include, CFP Board attorneys, CFP® volunteers and members of the CFP Board's Disciplinary and Ethics committee. 3. The "hearing panel" listens to the facts of the case and the offer their recommendation back to the DEC. 4. In the event that it is determined there are no grounds for discipline, then the DEC can dismiss the case without merit or with a cautionary letter. 5. In the event that there are grounds, the DEC may recommend to the CFP Board's CEO either private censure, a public letter of admonition, suspension or revocation of certification.

3., 4., 5. (the Commissions consist fo 9 CFP professionals)

What is the correct order of job activities, as described by the strategic planning process (i.e., CFP Board's Practice Standards)? 1. Implement the plan 2. Develop recommendations 3. Identify and select goals 4. Communicate recommendations 5. Understand contextual circumstances 6. Monitor plan 7. Analyze the current plan

5., 3., 7., 2., 4., 1., 6.

A CFP professional observes that John and Barbara (the clients) are constantly living a few steps ahead of their means. They assure the CFP professional that they will reign in their spending, but their credit card balances continue to rise. All the following are acceptable strategies EXCEPT: -Ask their son to talk to his parents about their spending habits and accumulate debt -Counsel the clients on credit card balance transfer strategies -Document their inability to take advice to guard the practice from risk -Terminate the relationship with the clients

Ask their son to talk to his parents about their spending habits and accumulate debt

Your client is forced to file for Chapter 7 bankruptcy. Which of the following statements is INCORRECT? -Assets that will be liquidated to pay creditors include IRA assets in excess of $1M, 529 educational savings account contributions made within the last two years and inherited retirement account assets. -If your client fails to satisfy the state's "means testing," then the petition for Chapter 7 bankruptcy will be automatically converted to a Chapter 13 bankruptcy. -Chapter 7 is liquidation event and it is available once very eight (8) years. -Debt that is discharged through Chapter 7 bankruptcy include credit card debt, hospital bills, home and auto debt and personal loans.

Debt that is discharged through Chapter 7 bankruptcy include credit card debt, hospital bills, home and auto debt and personal loans.

"A young, single client approaches a CFP® professional with $5,000 stating that he would like to develop a financial plan and invest in the market. This is his first experience investing and he would like help choosing an appropriate account. What is the CFP® professional's most appropriate course of action?" -Open a brokerage account with margin -Determine whether the client has any consumer debt -Determine whether the client has adequate life insurance -Open and fund a Roth IRA for the current year

Determine whether the client has any consumer debt

Series 7

General Securities Representative Exam: Individuals who pass this exam are licensed to sell a wide arrange of investment products, including: stocks, bonds, options and limited partnerships.

Series 6

Investment Company and Variable Contracts Exam: Individuals who pass this exam are licensed to sell open- and closed-end mutual funds, unit investment trusts, variable annuities and variable life insurance.

Jan, a CFP® Professional, is working with her client, Jason. During the meeting Jason seems a bit confused. Jan states, "....and that is why this recommendation will help you achieve your goal. Do you see that?" Jason responds by saying, "I just don't feel that it works. Why do you think that it will help me?" Based on the discussion, there is a communication disconnect. Given just this information, how would you categorize Jan and Jason's learning styles?

Jan- Visual; Jason- Kinestetic

Which government body regulates national Federally-Chartered Banks? -Office of the Comptroller of the Currency -State Department of Banking --Federal Reserve -Securities and Exchange Commission -Federal Deposit Insurance Corporation

Office of the Comptroller of the Currency

Which Act established the Security and Exchange Commissions

Securities Act of 1934

Jeremy, a registered investment adviser, is interviewing a prospective client. Which of the following must he do in order to comply with the Brochure Rule (Investment Advisers Act of 1940)? -Offer to provide the prospect with a brochure (e.g., ADV Form II, approved brochure) within one year of signing. -Provide the prospect with a brochure (e.g., ADV Form II, approved brochure) 48 hours prior to the signing of the engagement letter, if the client cannot walk away within a certain amount of time without financial consequence. -Provide the prospect with a brochure (e.g., ADV Form II, approved brochure) at the time the engagement letter is signed, if the new client can walk away with 10 days with no financial consequence. -Provide the prospect with a brochure (e.g., ADV Form II, approved brochure) 24 hours prior to the signing of the engagement letter, if the client cannot walk away within a certain amount of time without financial consequence.

Provide the prospect with a brochure (e.g., ADV Form II, approved brochure) 48 hours prior to the signing of the engagement letter, if the client cannot walk away within a certain amount of time without financial consequence.

Series 23

Sales Supervisor Module: This exam is designed to test the candidate's knowledge of rules and regulations related to the management of a general securities broker dealer.

Harold and Mary Anne Miler are a married couple in their early 40s with three children, ages 7, 10 and 12. Harold earns $350,000 per year as General Counsel of a mid-sized IT firm, and Mary Anne is a homemaker. They have major assets of $1.5M cash and $1M in stock options. College planning is of great concern to the Millers; currently they have no plan in place. They estimate that they will need $150,000 for each child in current dollars to fund their education. The Millers have constructed a budget and have determined that their household expenses are currently $12,000 per month, after tax. Assume that the Millers are in the 35% federal tax bracket and 6% state tax bracket. The Millers would like to set aside money to cover all of the required funding for their children's education. They are not confident that children will be able to handle money by age 21. Which of the following is most appropriate for the Millers?

Section 529 Qualified College Savings plan

Registered representatives of broker-dealers who offer securities to the public must register with FINRA and pass one or more series examinations. If the financial-service professional wishes to sell individual stocks that are listed on national exchanges to his or her client and engage in a conversation about securities, which of the following pair of Series examinations must be passed?

Series 7 and 63

Your client, Oscar, calls in a panic. Before his recent trip to Hawaii, he forgot to notify the post office to stop mail delivery. When he came back there were only a couple letters in the mail box. That seemed really strange to him. Just today, his credit card company called him that numerous out-of-state charges were made on the credit card, which was recently mailed to him. Which of the following responses is appropriate, given that Oscar quickly reports the stolen credit card? -The Truth in Lending Act caps the loss for unauthorized charges on a stolen or loss credit card at $50. -The Fair Credit Billing Act caps the loss for unauthorized charges on a stolen or loss credit card at $50 -He won't have to pay anything. It was not his fault. -Unfortunately, he will be liable for the full amount because he failed to notify the post office that they needed to hold his mail. -The Electronic Fund Transfer Act caps the loss for unauthorized charges on a stolen or loss credit card at $500.

The Truth in Lending Act caps the loss for unauthorized charges on a stolen or loss credit card at $50.

Luke is a CFP certificant who has a meeting with a prospective client later in the day. According to the CFP Board's Standards of Professional Conduct, Luke is expected to disclose all the following information to prospective clients except for one. Which of the following is not "material information?" -The fact that he filed for Chapter 11 bankruptcy 12 years ago (because the bankruptcy is no longer reported in his credit report). -The fact that he received a speeding ticket and has several outstanding parking tickets. -The fact that the firm receives referral fees from anyone that Luke will be working with on behalf of the client. -The fact that he formerly was a Real Estate Broker but his license was revoked.

The fact that he received a speeding ticket and has several outstanding parking tickets.

Series 63

Uniformed Securities Agent State Law Exam: This exam is designed to qualify candidates as securities agents. The exam focuses on principles of state securities regulation.

The Investment Company Act of 1940

established requirements for investment companies, including open- and closed-end mutual funds and unit investment trusts.

A downward sloping yield curve conveys all of the following information except for one. Which of the following is not a correct interpretation of a downward sloping yield curve? -the market expects an expanding economic environment -inflation is expected to fall -long-term securities of a particular type yield less than short-term securities of that type -short-term rates are higher than long-term rates

the market expects an expanding economic environment

Which of the following personality-preference pairings, as offered by Myers-Briggs, describes the way that clients make decisions?

thinking and feeling

The Maloney Act of 1938

was an amendment to the 1934 Act. This amendment established the NASD, which was authorized to regulate the over-the-counter securities market.