FPQP Exam 1 Questions with 100% Correct
Answers
Personal Financial Planning
the process of determining whether and how an individual can meet life goals through the
proper management of financial resources
fundamental areas of financial planning
cash management and use of debt
management of personal risk and insurance
investments
retirement planning
tax implications of financial planning
estate planning
FPQP standards of professional conduct
integrity
objectivity
competency
confidentiality
professionalism
Fiduciary Standard 5 responsibilities
1. to put client's interests first
2. to act with upmost good faith
.3. to provide full & adequate disclosure of all material facts
,4. not to mislead clients
5. to expose all conflicts of interest
3 basic financial statements
statement of financial planning
cash flow statement
budget (pro forma)
statement of financial position
STATIC - considers assets and liabilities at a certain point in time and can determine net
worth
Cash flow statement
records cash inflows and outflows over a period of time
net worth
assets minus liabilities
cash/cash equivalents
readily converted to cash without losing principal
ex. checking/savings, CDs, money market funds, life insurnance cash values
investment asset examples
stocks, bonds, mutual funds, etfs, Real estate, precious metals
Use asset examples
residence, automobiles, boats, etc.
,Areas to Evalutate
emergency fund
level of debt
level of savings
diversification of assets
retirement prep
tax issues
PITI
principal, interest, taxes, insurance
Front end debt ratio
28% or less
back end debt ratio
36% or less
non-mortgage debt ratio
20% or less
5 Cs of credit
character
capacity
capital
collateral
conditions
Fair and Accurate Credit Transactions Act
, gives consumers the right to request a free copy of their credit report every year.
Types of credit
Revolving and Installment
lien
legal right to obtain property if borrower defaults on loan
Ammortization
process of paying off debt by making periodic payments
Direct Unsubsidized Student Loans
not needs based, for under grad and prof students, fixed at 6.6%
Direct Subsidized Student Loans
need based, only for undergrad
parent plus student loans
not needs based, unlimited amount, fixed at 7%
Primary advantage of owning home over renting
tax break and potential appreciation
Fair Credit Billing Act
A law that sets requirements for resolving billing disputes
Equal Credit Opportunity Act
Gives all applicants the same rights. Credit providers may not discriminate based on: Age,
Social Security, Housing loans.
Answers
Personal Financial Planning
the process of determining whether and how an individual can meet life goals through the
proper management of financial resources
fundamental areas of financial planning
cash management and use of debt
management of personal risk and insurance
investments
retirement planning
tax implications of financial planning
estate planning
FPQP standards of professional conduct
integrity
objectivity
competency
confidentiality
professionalism
Fiduciary Standard 5 responsibilities
1. to put client's interests first
2. to act with upmost good faith
.3. to provide full & adequate disclosure of all material facts
,4. not to mislead clients
5. to expose all conflicts of interest
3 basic financial statements
statement of financial planning
cash flow statement
budget (pro forma)
statement of financial position
STATIC - considers assets and liabilities at a certain point in time and can determine net
worth
Cash flow statement
records cash inflows and outflows over a period of time
net worth
assets minus liabilities
cash/cash equivalents
readily converted to cash without losing principal
ex. checking/savings, CDs, money market funds, life insurnance cash values
investment asset examples
stocks, bonds, mutual funds, etfs, Real estate, precious metals
Use asset examples
residence, automobiles, boats, etc.
,Areas to Evalutate
emergency fund
level of debt
level of savings
diversification of assets
retirement prep
tax issues
PITI
principal, interest, taxes, insurance
Front end debt ratio
28% or less
back end debt ratio
36% or less
non-mortgage debt ratio
20% or less
5 Cs of credit
character
capacity
capital
collateral
conditions
Fair and Accurate Credit Transactions Act
, gives consumers the right to request a free copy of their credit report every year.
Types of credit
Revolving and Installment
lien
legal right to obtain property if borrower defaults on loan
Ammortization
process of paying off debt by making periodic payments
Direct Unsubsidized Student Loans
not needs based, for under grad and prof students, fixed at 6.6%
Direct Subsidized Student Loans
need based, only for undergrad
parent plus student loans
not needs based, unlimited amount, fixed at 7%
Primary advantage of owning home over renting
tax break and potential appreciation
Fair Credit Billing Act
A law that sets requirements for resolving billing disputes
Equal Credit Opportunity Act
Gives all applicants the same rights. Credit providers may not discriminate based on: Age,
Social Security, Housing loans.
