1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
School of Banking & Finance
UNSW Business School
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FINS2643-Wealth Management Summer 2021
Dashboard  My courses  FINS2643-5212_00042  Self Assessment Quizzes (Class Contribution 15%)  Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan
Started on Saturday, 9 January 2021, 4:37 PM
State Finished
Completed on Saturday, 9 January 2021, 6:28 PM
Time taken 1 hour 51 mins
Grade 15.00 out of 20.00 (75%)
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9/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 1
Correct
Mark 1.00 out of 1.00
There has been an increasing demand for financial planning advice across the Australian population over time because. Select one.
Select one:
a. The ever-changing and increasing complexity of government rules around taxation, social security and superannuation.
b. An aging population has meant more Australians require advice with regard to their retirement needs.
c. The compulsory superannuation guarantee has meant more Australians have retirement savings that need to be properly managed to maximize the
benefits in retirement.
d. All answers are correct

You got
it!
Your answer is correct.
The correct answer is: All answers are correct
Question 2
Incorrect
Mark 0.00 out of 1.00
A Financial Services Guide (FSG) is an important document that explains the financial services offered to a retail client. The law requires financial
advisors to provide their clients with the FSG as soon as practicable and before offering any advice. Which of the following is NOT included in an
FSG? Select one:
Select one:
a. Identify of dealer/licensee and authorized representative status
b. How the adviser is paid

Advisor remuneration structure should be explained in the FSG.
Retail client can use the level of disclosure to consider if potential
conflict exist.
c. The dispute resolution system that covers complaints
d. The adviser’s business value
Your answer is incorrect.
The correct answer is: The adviser’s business value
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10/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 3
Incorrect
Mark 0.00 out of 1.00
A person can start to provide independent financial advice on financial products to retail clients as soon as the person has completed an
approved degree.
Select one:
True 
False
Incorrect.
RG146 is still valid but no longer sufficient from 1 Jan 2019.
FASEA is the new regulator and sets a much higher education standard for financial advisers.
Meeting FASEA education requirement is needed only if a financial adviser provides advice to RETAIL CLIENTS.
Asset consultants such as Morningstar may advice their corporate clients on fund selection without meeting FASEA's education requirements.
One also need to pass a regulatory exam and complete a professional year to gain the authorized representative status at a licensee in order to practice.
There is also on-going continuous professional development education requirement.
The correct answer is 'False'.
Question 4
Correct
Mark 1.00 out of 1.00
John is 35 years old and recently married to Eva. They are considering to have their first child in 2 years and save for a deposit to buy an
apartment. Which lifecycle stage is the most relevant to John?
Select one:
a. Approaching retirement
b. Wealth accumulation phase
c. Saving versus consumption phase
d. Post retirement
e. Early family formation

Given the context this should be obvious. Newly
wedded and planning for children.
Your answer is correct.
The correct answer is: Early family formation
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11/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 5
Correct
Mark 1.00 out of 1.00
Under Pt 7.7 of the Corporations Act, providing entities that provide financial product advice to retail clients must:
Select one:
a. All of the answers

b. Give a general advice warning when giving general advice
c. Prepare and provide a Financial Services Guide (FSG)
d. Prepare and provide a Statement of Advice (SOA) when giving personal advice
Your answer is correct.
The correct answer is: All of the answers
Question 6
Correct
Mark 1.00 out of 1.00
Which of the following is not an appropriate conversation to be held at the initial fact-finding interview?
Select one:
a. Understand the client’s relevant personal circumstance.
b. Understand the client’s objectives and needs.
c. Check if the client has a solid understanding of the information contained in your Financial Services Guide.
d. Obtain client’s consent of the recommended product and the understanding of
recommended product features.

This is inappropriate. An appropriate advice
process has not been followed.
Your answer is correct.
The correct answer is: Obtain client’s consent of the recommended product and the understanding of recommended product features.
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12/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 7
Correct
Mark 1.00 out of 1.00
Which one of the following statements regarding behavioural finance is correct?
Select one:
a. The disposition effect refers to the situation where investors sells shares immediately after a small price rise, while refusing to sell
shares after incurring a huge loss.

Correct.
b. The disposition effect is a consequence of being overconfidence.
c. Limited attention refers to the situation where we only focus on the short-term investment return.
d. Limited attention occurs if there is a lack of enough information available in the market.
Your answer is correct.
The correct answer is: The disposition effect refers to the situation where investors sells shares immediately after a small price rise, while refusing to sell
shares after incurring a huge loss.
Question 8
Correct
Mark 1.00 out of 1.00
You are an employed financial planner of ABC Pty Ltd. One of your colleagues referred his friend Matt to you as he is looking for some retirement advice.
During the initial interview, you found out that Matt is currently married to Cathy, but they manage their finance separately. Matt is concerned that he may
not have enough funds to supplement the age pension and support his retirement life.
Do you think you can proceed to advise Matt given the missing/incomplete information?
Select one:
a. No, you cannot proceed because Matt and Cathy are married, and you are required to obtain both of their consents before preparing any advice.
b. No, you cannot proceed because the missing information about Cathy is relevant to the 
subject matter of the advice to Matt and would have impact on your ability to prepare
appropriate advice.
Correct, the missing information is critical and
relevant to the subject matter of the advice.
c. Yes, however you need to ensure you not only provide a warning to Matt, but also ensure Matt signs an acknowledgement letter to confirm that he
understands your advice may not be appropriate.
d. Yes, because only Matt is your client and you are not required to consider anything related to Cathy.
Your answer is correct.
The correct answer is: No, you cannot proceed because the missing information about Cathy is relevant to the subject matter of the advice to Matt and
would have impact on your ability to prepare appropriate advice.
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13/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 9
Correct
Mark 1.00 out of 1.00
After you told Matt that you cannot proceed with advice given the missing information, Matt became very angry and did not understand why
you could not help him. How would you communicate with Matt and calm him down?
Select one:
a. All of the statements are correct.

Correct, all three options are examples of
effective communication.
b. Be transparent and explain the rationale to Matt why the missing information about Cathy has impacted your ability to prepare appropriate advice.
c. Tell Matt that it is your responsibility to ensure the recommendation has taken all relevant personal information into consideration.
d. Use examples to assist explanation. For instance, explain how Cathy’s assets and income would have potential impact on Matt’s age pension
entitlements due to their marital status.
Your answer is correct.
The correct answer is: All of the statements are correct.
Question 10
Correct
Mark 1.00 out of 1.00
Which of the following statement regarding income tax is correct?
Select one:
a. All of the answers

You got
it!
b. Tax is collected over time via PAYG
c. The Australian Tax system is a self-assessment system.
d. The Australian Taxation Office (ATO) is responsible for the administration and enforcement.
e. Tax returns are due on 31 October.
Your answer is correct.
The correct answer is: All of the answers
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Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 11
Correct
Mark 1.00 out of 1.00
Which of the following statements regarding the residency requirement for income taxation are true? Select one.
I. Australian residents are liable for income derived from Australian sources only.
II. Australian residents are liable for income derived from global sources.
III. Non-Australian residents are liable for income derived from Australian sources only.
IV. Non-Australian residents are liable for income derived from global sources.
V. Non-Australian residents are not liable for any income taxes.
Select one:
a. I and III
b. II and IV
c. I and IV
d. II and V
e. II and III

You got
it!
Your answer is correct.
The correct answer is: II and III
Question 12
Incorrect
Mark 0.00 out of 1.00
Which of the following statement regarding capital gain tax is INCORRECT?
Select one:
a. Capital gains (or losses) are determined after deducting the reduced cost base from the value received on disposal of the asset
b. CGT is effective from 20 Sept 1985 and assets obtained before this date is exempted from CGT.
c. Capital gain tax (CGT) is part of the income tax system, as opposed to Goods and
Services Tax.

This statement is correct. Fringe Benefit Tax and Stamp
Duty are two other tax systems outside Income Tax.
d. As long as an asset has been held for more than 12 months, both discount and indexation methods are available to calculate assessable capital
gains.
Your answer is incorrect.
The correct answer is: As long as an asset has been held for more than 12 months, both discount and indexation methods are available to calculate
assessable capital gains.
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15/19
1/13/2021
Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 13
Correct
Mark 1.00 out of 1.00
Which of the following is not exempted from capital gain tax?
Select one:
a. All of the answers
b. A second home not used for income production

c. Personal use items purchased for less than $10,000
d. Testamentary trust distribution
Your answer is correct.
The correct answers are: A second home not used for income production, Testamentary trust distribution
Question 14
Correct
Mark 1.00 out of 1.00
Which of the following statements regarding allowable deductions is INCORRECT.
Select one:
a. Interest on home mortgage is deductible as long as you are living at the property and earning an income. 
That's right. This is considered a
private expense.
b. Losses or outgoing necessarily incurred in gaining assessable income is a requirement for claiming tax deductions.
c. Capital expenditure on an investment asset, such as a new roof for an investment property cannot be immediately deducted.
d. Private clothing necessary for workplace, such as suits, is not deductible.
Your answer is correct.
The correct answer is: Interest on home mortgage is deductible as long as you are living at the property and earning an income.
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16/19
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Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 15
Correct
Mark 1.00 out of 1.00
Which of the following statements regarding tax of superannuation fund is INCORRECT?
Select one:
a. Superannuation funds are trusts but receive special tax treatments by legislation.
b. Earnings on superannuation balance in the pension fund are not subject to income or capital gain tax
c. Superannuation funds pay 15% tax on its income.
d. Super funds do not distribute their income or capital to members unless members meet certain age and employment conditions.
e. Capital gain tax (CGT) is levied on capital gains and capital gain on assets held for more 
than 12 months is effectively taxed at 15%.
This statement is wrong. Long-term capital gain is
taxed at 10% for superannuation fund.
Your answer is correct.
The correct answer is: Capital gain tax (CGT) is levied on capital gains and capital gain on assets held for more than 12 months is effectively taxed at 15%.
Question 16
Incorrect
Mark 0.00 out of 1.00
James is a full-time financial adviser at the NAB. He doesn’t work at home and use his family home for private purposes. His monthly mortgage payments
are $2,200. In 2019, James bought a new apartment and earns $750 weekly as the renting revenue. The monthly mortgage payments on this apartment are
$2,000, and all other monthly cost related to this new apartment is $100. Which of the following statements is the most correct?
Select one:
a. For his residential home, it is positive gearing.
b. James can claim both mortgage as his tax deduction.
c. James’ taxable income will increase by $13,800 after purchasing the new apartment.
d. For his new apartment, it is negative gearing.

This is wrong. It is positive gearing as the cost of borrowing
($2100*12) is smaller than the revenue ($750 * 52).
Your answer is incorrect.
The correct answer is: James’ taxable income will increase by $13,800 after purchasing the new apartment.
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Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 17
Correct
Mark 1.00 out of 1.00
Which of the following statements regarding the taxation of trusts is INCORRECT?
Select one:
a. Trusts need not to lodge tax returns.

Trusts need to lodge tax returns. They are
taxed on undistributed income.
b. A trust cannot distribute a loss but can carry forward the loss to offset future income.
c. Distributed income is taxed solely in the hands of the beneficiaries
d. Trusts, other than superannuation funds, are not taxed on their distributed income
e. Undistributed income of trust is taxed at the highest personal marginal tax rate.
Your answer is correct.
The correct answer is: Trusts need not to lodge tax returns.
Question 18
Correct
Mark 1.00 out of 1.00
What is GST of a Macbook Pro with a retail price of $2,200? (Please only answer with whole dollar value, for example, 160. Do NOT put in $ sign
or any other text.)
Answer:
200

GST = $2200/11 = $200
The correct answer is: 200
Question 19
Correct
Mark 1.00 out of 1.00
Gino is a full-time financial adviser. His wage is $51291 and has $22,500 value of shares from a large company (4.5% fully franked dividend rate). Also, he
received a capital gain of $4280 from selling a bond he bought 18 months ago. Gino spent $1,400 computer for work only and it can be depreciated over
4 years. Calculate Gino’s basic tax payable to 2 decimal (number only; no $ or comma).
Answer:
11440.90 
Assessable Income = 51291+22500*0.045/0.7+4280*.5
Deduction = 1400 / 4 = 350
Basic Tax Payable = 3572+32.5% * (Taxable Income)
3572+32.5%*(51291+22500*0.045/0.7+4280*.5-1400/4-37000)*0.325
The correct answer is: 9268.41
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18/19
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Quiz 1 and Mid-Term Preparation (closes Mon 11 Jan @ 11:00 am): Attempt review
Question 20
Incorrect
Mark 0.00 out of 1.00
According to the tax tables, how much Low Income Tax Offset and Low and Middle Income Tax Offset a single person can receive if he earns
$50,000 per year? (Please only answer with whole dollar value, for example, 160. Do NOT put in $ sign or any other text.)
Answer:
250

The correct answer is: 1330
Question 21
Complete
Not graded
You are a financial planner. Explain the steps and strategy that you would take to know a client before providing advice. Why is it important to
perform this task and document it?
In order to know a client before providing advice, a financial planner must gather client information.
Client information is normally gathered in a data-collection questionnaire (also referred to as a fact finder) and forms the basis for the preparation of the
SOA. Completing a data collection questionnaire is one of the key means by which a financial planner is able to demonstrate that they have made
reasonable enquiries into the personal circumstances of the client (RG 175.281– 287) and satisfied the ‘best interests’ obligations imposed under s. 961B
of the Corporations Act. It is important for the client to be made aware that the planner is unable to provide thorough and effective advice unless the
client provides accurate and comprehensive information concerning their personal and financial circumstances. Furthermore, the planner also should
assess the client’s risk profile and longevity.
You should describe the steps, Factfind, risk profiling, financial literacy, longevity assessments.
Face-to-face interaction is essential for verification and deeper learning of client profile.
See the client engagement videos for demonstrations.
Asking open ended question and listen carefully are two key additional methods to know the client.
Avoid using leading questions that steer clients to a yes or no response.
Knowing the client is critical to determine if the advice, strategies and language is appropriate for the client.
Knowing the client is common sense, a functional requirement and the only ethical method to provide financial advice. Make sure this is documented.
Legally, the Corporations Act imposes the Best Interest Duty and knowing the clients and providing appropriate advice are requirements of the safe
harbour provisions. This is further explained in ASIC RG 175.
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19/19