Transcription
Sample Case and Questions CFPCM Certification Examination
Institute of Financial Planners of Hong Kong2011 EditionPublished byThe Institute of Financial Planners of Hong KongTelephone: (852) 2982 7888Fax: (852) 2982 7777Website: www.ifphk.orgEmail: info@ifphk.orgAll rights reserved. No part of this publication may be reproduced, stored in aretrieval system, or transmitted in any form or by any means, electronic,mechanical, photocopying, recording or otherwise, without the prior writtenpermission of the Institute of Financial Planners of Hong Kong (IFPHK).Subject to the IFPHK’s written permission, any publication of this Sample Caseand Questions Booklet or any part of it, must be accompanied by anacknowledgement given to the IFPHK. The IFPHK shall retain the right towithdraw any permission granted to any third party to use this Sample Caseand Questions Booklet if there is found to be any misuse of information.DisclaimerThis Sample Case and Questions Booklet is published solely to help candidatesof the CFPCM Certification Examination familiarize themselves with the formand style of questions which they may see in the examination and does notprovide academic, legal or expert advice. Every effort has been made toensure the accuracy of the information contained in this booklet; however, noresponsibility for loss occasioned to any person acting or refraining fromaction as a result of any materials in this publication will be accepted by thepublisher and/or individual contributors. If professional advice or other expertassistance on any of the issues raised is required, the services of a competentprofessional person should be sought.CFPCM, CERTIFIED FINANCIAL PLANNERCM andare certification marks owned outside the U.S.by Financial Planning Standards Board Ltd. The Institute of Financial Planners of Hong Kong isthe marks licensing authority for the CFP marks in Hong Kong and Macau, through agreementwith FPSB.
Introduction of the Institute of Financial Planners of HongKong (IFPHK)IFPHK was established in June 2000 as a non-profit organizationfor the fast–growing financial industry. It aims to be recognizedin the region as the premier professional body representingfinancial planners that uphold the highest standards to benefitthe public.The Institute is the sole licensing body in Hong Kong authorizedby Financial Planning Standards Board Limited to grant themuch-coveted and internationally-recognized CFP certification toqualified financial planning professionals in Hong Kong andMacau.It represents more than 10,000 financial planning practitioners inHong Kong from such diverse professional backgrounds asbanking, insurance, independent financial advisory, stockbroking,accounting, and legal services.Currently there are over 133,000 CFP professionals in 24countries/regions; the majority of these professionals are in theU.S., Canada, Australia and Japan, with more than 4,100 CFPprofessionals in Hong Kong. Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.i
About this Sample Case and Questions BookletThis sample case and questions booklet consists of 1 samplecase and 20 sample questions.The sample case and the sample questions are provided to helpcandidates familiarise themselves with the form and style ofquestions which they may see in the CFP CertificationExamination. They may NOT fully reflect the cognitive level ofquestions of the CFP Certification Examination.For referencepurpose, the sample questions are also supplemented by thecorresponding suggested answers. The sample questions havebeen drafted to reflect current law and practice as of February2011.This Sample Case and Questions Booklet, though based uponreal examination papers, does NOT constitute past examinationpapers, NOR does it represent the number of cases or questionsor topic coverage in actual examinations. The economic dataand/or assumptions in the sample case may not necessarilyreflect actual past or current situations.It should also be noted that this Sample Case and QuestionsBooklet is by no means intended to be a practise examinationpaper for candidates. Candidates should not equate success inanswering the sample questions in this booklet to success in theCFP Certification Examination. Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.ii
Sample Case and QuestionsSample Case and Questions(2011 Edition) Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.1
Sample Case and Questions2011 EditionSample Case - Case FactsDavid Jones1. Today is 1 June 2010. Lily Fong, a financial planner of HappyInsurance Company, received a call from her current client, DavidJones, to review his financial plan.2. Below is some information about David that Lily has gathered sofar:3. Client information:ClientClient’s SpouseNameDavid JonesNancy JonesDate of birth1 June 19582 March 1962NationalityCanadianCanadianMarital statusMarriedMarriedChief FinancialOfficerHousewifeTasty Foods Limited*N/AFull-TimeN/ASince 1 April 1999N/AYesYesOccupationEmployerWork statusTime with presentemployerRegular medicalcheck-up?Any long-termHigh blood pressuredisability or healthproblems?* Company listed on the Toronto Stock ExchangeNo Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.2
Sample Case and Questions2011 Edition4. Dependant information:NameRelationship withclientDate of birthHealthDependant 1Dependant 2Sunny JonesSandy JonesSonDaughter15 May 20005 April 2002GoodGood5. Annual income of the Jones family for the period from 1 April 2009to 31 March 2010:Amount(in HKD unlessotherwise specified)Salary income received*1,680,000Bonus income received280,000Reimbursement received fromemployerRent payment (Sai Kung flat) Annual airfare to CanadaOther benefits received from employerScholarships for David’s childrenTuition fees for David’s children paid byemployer directly to the schoolIncome received from other sourcesInterest and dividendsRental income from Ma Wan flat#480,00050,00010,000216,00060,000Unknown* before deducting the premium for the group medical insurancepolicy for Nancy & David’s children and the MPF contributions rateable value of the property: HKD450,000#rateable value of the property: HKD250,000 Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.3
Sample Case and Questions2011 Edition6. Annual expenses of the Jones family for the period from 1 April2009 to 31 March 2010:Amount(in HKD unlessotherwise specified)Expenditure on food240,000Housing expenses (for Sai Kung flat)Rent480,000Utilities and others80,000Management fees48,000Household expensesFilipino domestic helper54,000Others (e.g. clothing, personalgrooming, toiletries)700,000Transportation expensesFuel, maintenance & repairs, parking,vehicle licence80,000Others (including taxis & publictransport)50,000Education and recreation expensesOther school expenses50,000Vacation100,000Other recreation100,000Medical expensesPharmacy/drugs10,000InsuranceLife insurance premium for David18,000Life insurance premium for Nancy15,000Group medical insurance premium forNancy, Sunny and Sandy5,000Building insurance premium (Ma Wanflat)4,000Household contents insurance premium(Sai Kung flat)6,000OthersContributions to Mandatory ProvidentFund Scheme12,000 Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.4
Sample Case and Questions2011 EditionAmount(in HKD unlessotherwise specified)Mortgage payment for Ma Wan flatUnknownManagement fee for Ma Wan flat12,000Government rent for Ma Wan flat4,800Rates for Ma Wan flat8,000Support to George (David’s nephew)60,000Donations to the Community Chest ofHong Kong20,0007. Assets and liabilities of the Jones family (as at 31 March 2010):Amount(in HKD unlessotherwise specified)Property in Ma Wan3,200,000Mortgage loanUnknownMotor car400,000Stocks500,000Unit trusts and bonds300,000Savings in HKD500,000Savings in CADCAD50,000Mandatory Provident Fund Scheme accountbalanceCanadian superannuation account180,000CAD300,000Cash value of life insurance policies800,000Hi-Fi system200,000Credit card balance20,0008. Both David Jones and his wife Nancy are great fans of Chineseculture. They considered Hong Kong the perfect place for them tostay. To this end, David applied to his employer to be relocated tothe Hong Kong office of Tasty Foods Limited (Tasty) from theToronto headquarters several years ago. Although he is employedon contract basis, David managed to negotiate a very generousexpatriate package. As time goes by, the Jones will soon obtainthe right of abode in Hong Kong. Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.5
Sample Case and Questions2011 Edition9. The Jones live in a house in Sai Kung arranged by Tasty. Underthe arrangement, David pays rent every month in advance andreceives reimbursement from Tasty the month after. Sunny andSandy attend an international school in Clearwater Bay. The annualtuition fee is HKD108,000 for each of them which are directly paidfor by Tasty to their school as part of David’s expatriate package.Tasty also pays a scholarship of HKD5,000 each per annum inrespect of Sunny and Sandy under the company’s standing policyfor senior staff. Recently, the school they are attending announcedthat a debenture of HKD150,000 should be purchased for everystudent starting from the academic year 2010/11. The debentureis redeemable when a student leaves the school. Tasty agreed tobuy and hold the debentures on David’s behalf.10. David is very fond of his 20-year-old nephew, George, and hasbeen supporting him financially since he was born. David knowsthat George is grateful for his money because he has just entereduniversity and needs the money to support his living and pay histuition fees.11. David is covered by a group medical policy and a group term lifeinsurance policy offered by Tasty. The medical policy has an inpatient policy with hospital cash of a maximum coverage ofHKD300,000 per annum, together with dental insurance. Tastyallows David to enroll his direct relatives for the same medicalpolicy at cost, and David has exercised his right and enrolled Nancyand their children to the policy at an annual premium of HKD5,000which is deducted from his salary income. The life policy covers 2years of David’s salary with a permanent total disablement rider.12. On top of David’s group term life policy, both David and Nancyhave taken out other life insurance policies. The table belowsummarizes details of the life insurance policies of David andNancy:InsuredDavidDavidNancyWhole lifeGroup term lifeTerm lifeHKD3,000,0002 x annualsalaryHKD2,000,000Year ofPurchase1990--1993PolicyproviderHappy Ins. Co.ABC Ins. Co.Happy Ins.Co.Policy typeSum insuredRiders PersonalAccident Permanenttotal PersonalAccident Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.6
Sample Case and Questions2011 Edition DoubleIndemnitydisablement ntingentbeneficiaryGeorgeSunnySunnyCash valuesHKD800,000-----As a reward to loyal customers, Happy Insurance Company hasrecently offered two extra riders free-of-charge to David, who aimsto maximize the long-term benefits he can get from them.13. David is still uncomfortable with his current insurance coverage,and would like to make sure that Nancy and their children will beprovided with the largest amount of income as soon as possible ifhe predeceases them, or if his children are suddenly orphaned.Because one of his friends has bought an annuity for this purposeand recommends it to him, David asks Lily for a proposal for a purelife annuity.14. Other employee benefits provided by Tasty include annual returnairfare to Canada, and a Canadian superannuation account intowhich Tasty contributes 9% of David’s salary every month. Theaccount balance can be withdrawn upon David’s retirement.Though not required by law, both Tasty and David also contributeto the Mandatory Provident Fund Scheme in Hong Kong.15. On 1 June 2004, Nancy bought a small residential flat in Ma Wan atHKD2,500,000 as part of her investment. The purchase of the flatwas fully financed by a mortgage with Coco Bank for a term of 15years at a fixed rate of 6% p.a. The first mortgage payment wasmade on 30 June 2004. The current market value of the flat isHKD3,200,000 and it is expected to grow at an annual rate of 4%in the future. The flat has been let out for rental income since itwas bought.Nancy is responsible for the management fee,government rent and rates. After deducting these expenses, theremaining rental income is exactly enough to pay for the monthlymortgage. Nancy expects that the rental income will remain stablefor the duration of the mortgage term. Nancy has taken out abuilding insurance policy on the flat since purchasing it. She is notsure if she should adjust the sum insured since it has been over 5years when she bought the flat.16. David would like to restructure his investment portfolio byincluding one of the following funds into it: Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.7
Sample Case and Questions2011 EditionFundSUNMOONSTAREARTHAverage annual return duringthe last five years9.5%12%13%13.5%Standard deviations of returnduring the last five years6%8%8.5%9.5%- Fund SUN: An equity income mutual fund investing in Hong Kongstocks.- Fund MOON: A growth-oriented mutual fund investing in HongKong stocks.- Fund STAR: An international equity mutual fund.- Fund EARTH: Taiwan equity index exchange-traded fund.- The short-term certificate of deposit rate in Hong Kong is 4%.The correlation coefficients of the above four funds during the lastfive years .70.70.2EARTH1.017. As David is approaching his intended retirement date, which fallson his 60th birthday, the family has been thinking about returningto Canada. Sunny and Sandy will definitely go back to Canada fortheir university education, where they will work part-time and payfor their own tuition fees like their father did. The family hastherefore made up its mind to return to Canada after David retires,by which time they will sell the flat in Ma Wan and use theproceeds to buy a house in Canada. David has been researchingthe prices of property in Canada, and found that a property thatfits the needs of the family is selling at a price equivalent toHKD3,000,000 Hong Kong dollars today, and is expected to growat an annual rate of 6%.18. David and Nancy have both made wills two years ago while theywere on their annual trip to Canada. Nancy has kept the only copyof her will with a relative in Toronto while David has kept his with afriend who Nancy does not know.In David’s will, he has madebequests in favour of Nancy and his children only. Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.8
Sample Case and Questions2011 Edition19. Other information:Exchange rate: CAD1.00 HKD7.80CAD stands for Canadian dollars.- End of Case Facts - Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.9
Sample Case and Questions2011 EditionSample QuestionsQuestion 1Which of the following are David’s personal and financial goals?I.Ensure a stable stream of income for his family after hisretirement and after his death.II. Arrange for long-term health care protection for both himself andNancy.III. Provide for housing arrangements in retirement.IV. Set up a fund for the university education of Sunny and Sandy.A.B.C.D.I & IV onlyII & III onlyI, II & III onlyI, II, III & ****Answer: C Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.10
Sample Case and Questions2011 EditionQuestion 2What is the amount of rental income from the Ma Wan flat for the yearended 31 March *****Answer: C Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.11
Sample Case and Questions2011 EditionQuestion 3Which of the following statement(s) about the Jones couple’s currentfinancial status and investment position is/are CORRECT?I.Based on the information provided, their solvency ratio is greaterthan 0.6.II. The length of their pre-retirement investment horizon is of anintermediate term.III. They have a high net worth hence they have a high risk tolerancelevel.IV. They should allocate part of their savings to high leverageinvestments.A.B.C.D.II onlyI & II onlyI, II & IV onlyI, III & IV ******Answer: B Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.12
Sample Case and Questions2011 EditionQuestion 4What is the appropriate advice for Nancy regarding the insurancepolicy she took out on her flat in Ma Wan?A.B.C.D.Nancy should adjust the sum insured with reference to thechange in repair/rebuilding cost of the flat, if any.Nancy should adjust the sum insured with reference to the valueof the household contents in the flat.Nancy should increase the sum insured to reflect the increase inthe property price.There is no need for Nancy to review the sum insured since thepremium is calculated with reference to the gross floor area of **********Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.13
Sample Case and Questions2011 EditionQuestion 5Assume that relevant factors remain constant. Which of the followingitems should Lily Fong include in a Needs Approach analysis in order toascertain whether David currently has adequate life insurance cover?I.II.III.IV.V.Education fees for Sunny and Sandy.Financial support to Nancy.Mortgage repayments for the Ma Wan flat.Support to George.Term life insurance cover of Nancy.A.B.C.D.II & V onlyI, II & IV onlyI, III & V onlyI, II, III, IV & ***Answer: B Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.14
Sample Case and Questions2011 EditionQuestion 6To address David’s aim, which TWO of the following riders offered freeof-charge by Happy Insurance Company should Lily advise him tochoose?I.II.III.IV.Critical/terminal illness benefit rider.Disability income benefit rider.Medical benefits rider.Waiver of premium rider.A.B.C.D.I & III onlyI & IV onlyII & IV onlyIII & IV ******Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.15
Sample Case and Questions2011 EditionQuestion 7With respect to David’s request for a proposal for an annuity, which ofthe following is/are APPROPRIATE piece(s) of advice that Lily shouldgive him (see paragraph 13 of this case)?I.For the purposes of attaining David’s goal, a Joint-and-LastSurvivor Annuity is more suitable than his original choice.II. David can achieve his aim to a certain extent by utilizing asuitable settlement method for his whole life policy.III. David’s original choice of an annuity will help him cope with theimpact of inflation.A.B.C.D.I onlyI & II onlyII & III onlyI, II & *****Answer: B Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.16
Sample Case and Questions2011 EditionQuestion 8What is/are the advantage(s) of choosing Fund EARTH compared withthe other three potential funds that David is considering?I.Easier to trade.II. International diversification.III. Lower bid-ask spread.A.B.C.D.I onlyI & II onlyII & III onlyI, II & *****Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.17
Sample Case and Questions2011 EditionQuestion 9David would like to know the performance of the four funds accordingto the Sharpe’s performance index. Which ONE has the *************Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.18
Sample Case and Questions2011 EditionQuestion 10Assume that David would like to restructure his portfolio so that half ofhis portfolio’s value will be invested in Fund MOON, and the other halfin Fund STAR. What would be the expected standard deviation for hisportfolio after the proposed *********************************Answer: D Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.19
Sample Case and Questions2011 EditionQuestion 11Assume that David begins to withdraw from his superannuationaccount when he retires, and transfers the money to one of hisfollowing existing investments. Ignoring tax issues, which ONE ofthem is the MOST SUITABLE choice for him?A.B.C.D.Canadian dollar time deposit account which generates an annualreturn of 5%.Canadian stock market portfolio which generates an averageannual return of 12%.Emerging markets long-term bond fund which generates anaverage annual return of 8%.Money market mutual fund which invests in Euro money marketsecurities and generates an average annual return of *****Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.20
Sample Case and Questions2011 EditionQuestion 12Which ONE of the following statements about David’s tax position as aCanadian expatriate is CORRECT?A.B.C.D.David is liable to pay Salaries Tax in Hong Kong because he hasmade Hong Kong his home and ordinarily resides in Hong Kong.David is liable to pay Salaries Tax in Hong Kong because underthe double tax treaty signed between China and Canada, anyonewho spends more than 180 days in Hong Kong in a year is liable.David is liable to pay Salaries Tax in Hong Kong but incomegenerated from any services rendered outside Hong Kong can beexcluded.David is liable to pay Salaries Tax in Hong Kong but is entitled toclaim exemption from Salaries Tax on the ground that all hissalary income has been taxed in *********Answer: C Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.21
Sample Case and Questions2011 EditionQuestion 13In relation to the education benefits from Tasty to David as regardsSunny and Sandy, which ONE of the following is a CORRECT HongKong tax implication with respect to David?A.B.C.D.Debentures to be provided by Tasty will be taxable because theyare deemed to be income from employment.Scholarships for Sunny and Sandy are not taxable because theyare not income received by David.Tuition fees paid by Tasty are not taxable if Tasty enters intocontract with the school and pays directly.Tuition fees paid by Tasty are taxable because this is a fringebenefit provided by the ***********Answer: D Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.22
Sample Case and Questions2011 EditionQuestion 14Which of the following ways can help the Jones to minimize theirProperty Tax payable in Hong Kong?I.Ask the tenant to pay the management fees directly to theproperty management company and reduce the monthly rent bythe corresponding amount.II. Ask the tenant to shoulder the rates and reduce the monthly rentby the corresponding amount.III. End the existing tenancy agreement and enter into a new contractwith rent payable annually in advance in lump sum.IV. Have Nancy elect to be assessed under Personal Assessment.A.B.C.D.I onlyI & III onlyI, II & IV onlyII, III & IV ******Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.23
Sample Case and Questions2011 EditionQuestion 15What is the net assessable value of the Ma Wan flat under the HongKong Property Tax for the year of assessment ********Answer: B Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.24
Sample Case and Questions2011 EditionQuestion 16For the purpose of calculating David’s Salaries Tax for the year ofassessment 2009/10, what is the amount of rental value to beconsidered as part of his assessable *******Answer: B Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.25
Sample Case and Questions2011 EditionQuestion 17Why is Tasty NOT obliged to enroll David to the Mandatory ProvidentFund (MPF) Scheme in Hong Kong?A.B.C.D.David’s employment is on contract basis, therefore he is notconsidered a permanent employee and is exempted.David has no right of abode in Hong Kong and is exempted as anexpatriate.Tasty has enrolled David in a Canadian superannuation schemeand is exempted.Tasty is a Canadian company and is exempted as an ******************Answer: C Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.26
Sample Case and Questions2011 EditionQuestion 18What piece(s) of advice should Lily give David with respect to estateplanning for himself and his wife?I.To arrange for ancillary probate of the Ma Wan flat with theprobate court in Canada.II. To ensure that their respective wills comply with the WillsOrdinance in order for them to be enforceable in Hong Kong.III. To make copies of their respective wills so that they have copiesin Hong Kong and Canada.A.B.C.D.II onlyI & III onlyII & III onlyI, II & *****Answer: C Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.27
Sample Case and Questions2011 EditionQuestion 19Assume that relevant factors remain constant. Which of the followingactions should David take to help fulfill his wish in paragraph 13 of thiscase?I.II.III.IV.Appointing more than one executor for his will.Changing the contingent beneficiary in his whole life policy.Having joint bank and investment accounts with Nancy.Setting up an enduring power of attorney for himself.A.B.C.D.II & III onlyII & IV onlyI, II & III onlyI, III & IV ******Answer: A Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.28
Sample Case and Questions2011 EditionQuestion 20If David passes away in Hong Kong tomorrow and because no one canfind his will, he is deemed to be intestate, which of the followingstatements about the succession of his estate are CORRECT?I.George is entitled to apply to the court for reasonable financialprovisions from David’s estate.II. Nancy, Sunny and Sandy will be entitled to share David’s personalchattels.III. Nancy will first be entitled to a net sum of HKD500,000 fromDavid’s residuary estate with interest, as well as a half of theremainder of his residuary estate.IV. Sunny and Sandy will be entitled to share the remainder ofDavid’s residuary estate, but their share will be held on statutorytrusts.A.B.C.D.I & II onlyI & III onlyI, III & IV onlyII, III & IV ******Answer: C- End of Sample Case and Questions - Copyright 2011. All rights reserved. The Institute of Financial Planners of Hong Kong Limited.29
樣本個案及試題 CFPCM資格認證考試樣本個案及試題CFP 資格認證考試CM
This sample case and questions booklet consists of 1 sample case and 20 sample questions. The sample case and the sample questions are provided to help candidates familiarise themselves with the form and style of questions which they may see in the CFP Certification Examination. They may NOT fully reflect the cognitive level of questions of the .