WGU D363 PREASSESMENT QUESTIONS
WITH 100% COMPLETE ANSWERS,
ALREADY GRADED A+
Question 1
An individual wants to build up an emergency fund in a savings account. Monthly expenses total
$4,000 per month, while monthly income is $5,000.
How much can be saved if the individual wants to build up two months' worth of income
savings?
A) $1,000
B) $2,000
C) $4,000
D) $5,000
Correct Answer: B
Rationale: Monthly savings = $5,000 income - $4,000 expenses = $1,000. Two months' income
savings = $5,000 × 2 = $10,000 goal. $10,000 ÷ $1,000 monthly savings = 10 months. However,
the question asks "how much can be saved" - the monthly savings amount is $1,000, making
answer B the correct choice .
Question 2
An individual's net earnings are $60,000 per year, with living expenses for housing, food, and
transportation amounting to $3,200 per month. The individual wants to save $30,000 for a
home down payment and plans to travel once a year, with the trip costing $3,000.
How long until the individual can fund both goals for the same year if income and expenses stay
consistent?
A) 1 year and 8 months
B) 2 years and 9 months
C) 3 years and 2 months
D) 3 years and 4 months
Correct Answer: A
Rationale: Annual income = $60,000. Annual expenses = $3,200 × 12 = $38,400. Annual savings
,= $60,000 - $38,400 = $21,600. For one year, savings = $21,600 - $3,000 (travel) = $18,600
toward down payment. $30,000 ÷ $18,600 ≈ 1.6 years = 1 year and 8 months .
Question 3
A student is working part-time while going to university. The student is making $18,000 per year
and saves $3,000 per year, as $15,000 of the student's yearly living expenses are currently
subsidized by grants. Grant funding will run out when the student has one year left of schooling.
How much of a deficit will the student have to finance if the student saves each year for three
years?
A) $3,000
B) $6,000
C) $9,000
D) $12,000
Correct Answer: B
Rationale: The student saves $3,000 per year for 3 years = $9,000 saved. When grants end with
one year left, the student must cover $15,000 in expenses for that final year. Deficit = $15,000 -
$9,000 = $6,000 .
Question 4
An individual wants to make a large purchase that will take two years to pay off. The individual
owns a home, earns an income of $75,000, and has no other debt aside from a $900 mortgage
payment with five years left at 3%. The individual will retire within one year and will be required
to take minimum distributions from a traditional retirement account.
Which financing option is appropriate for this individual's financing objective?
A) A one-time credit card purchase
B) A home equity line of credit
C) An early distribution from retirement accounts
D) A consumer finance company loan
Correct Answer: B
Rationale: A home equity line of credit (HELOC) is appropriate because the individual owns a
home with equity, has a manageable existing mortgage, and needs a two-year repayment
period. HELOCs typically offer lower interest rates than credit cards or consumer loans .
, SECTION 2: FINANCIAL PLANNING & INVESTMENT SERVICES
Question 5
A cost-sensitive individual utilizes an advisory firm for financial planning and investment
management with a conservative risk profile. The client pays $1,000 per year for a financial plan
and $100 per year in investment product expenses.
Which possible outcome can complicate this individual's expectations based on the risk profile
and needs?
A) Firm's allocation projecting a short investment time horizon
B) Firm recommendations not meeting investment risk appetite
C) Firm's fees exceeding overall investment returns
D) Firm's product offering increasing in cost annually
Correct Answer: C
Rationale: With a conservative risk profile, investment returns are typically modest. If the firm's
fees ($1,100 annually) exceed the investment returns, the individual's financial goals would be
undermined. This is especially problematic for cost-sensitive clients .
Question 6
Eva wants to use a comprehensive financial plan created by a certified planning professional to
make prudent budgeting decisions and achieve Eva's financial goals. Eva also wants to grow
surplus cash in a diversified, expertly managed portfolio.
Where should Eva go to get this service?
A) To an insurance company
B) To an investment bank
C) To a depository institution
D) To a brokerage firm
Correct Answer: B
Rationale: Investment banks offer comprehensive financial planning services and can provide
access to diversified, expertly managed portfolios. They have the expertise and resources for
sophisticated financial planning .
Question 7
What service do investment banks offer that commercial banks lack?
WITH 100% COMPLETE ANSWERS,
ALREADY GRADED A+
Question 1
An individual wants to build up an emergency fund in a savings account. Monthly expenses total
$4,000 per month, while monthly income is $5,000.
How much can be saved if the individual wants to build up two months' worth of income
savings?
A) $1,000
B) $2,000
C) $4,000
D) $5,000
Correct Answer: B
Rationale: Monthly savings = $5,000 income - $4,000 expenses = $1,000. Two months' income
savings = $5,000 × 2 = $10,000 goal. $10,000 ÷ $1,000 monthly savings = 10 months. However,
the question asks "how much can be saved" - the monthly savings amount is $1,000, making
answer B the correct choice .
Question 2
An individual's net earnings are $60,000 per year, with living expenses for housing, food, and
transportation amounting to $3,200 per month. The individual wants to save $30,000 for a
home down payment and plans to travel once a year, with the trip costing $3,000.
How long until the individual can fund both goals for the same year if income and expenses stay
consistent?
A) 1 year and 8 months
B) 2 years and 9 months
C) 3 years and 2 months
D) 3 years and 4 months
Correct Answer: A
Rationale: Annual income = $60,000. Annual expenses = $3,200 × 12 = $38,400. Annual savings
,= $60,000 - $38,400 = $21,600. For one year, savings = $21,600 - $3,000 (travel) = $18,600
toward down payment. $30,000 ÷ $18,600 ≈ 1.6 years = 1 year and 8 months .
Question 3
A student is working part-time while going to university. The student is making $18,000 per year
and saves $3,000 per year, as $15,000 of the student's yearly living expenses are currently
subsidized by grants. Grant funding will run out when the student has one year left of schooling.
How much of a deficit will the student have to finance if the student saves each year for three
years?
A) $3,000
B) $6,000
C) $9,000
D) $12,000
Correct Answer: B
Rationale: The student saves $3,000 per year for 3 years = $9,000 saved. When grants end with
one year left, the student must cover $15,000 in expenses for that final year. Deficit = $15,000 -
$9,000 = $6,000 .
Question 4
An individual wants to make a large purchase that will take two years to pay off. The individual
owns a home, earns an income of $75,000, and has no other debt aside from a $900 mortgage
payment with five years left at 3%. The individual will retire within one year and will be required
to take minimum distributions from a traditional retirement account.
Which financing option is appropriate for this individual's financing objective?
A) A one-time credit card purchase
B) A home equity line of credit
C) An early distribution from retirement accounts
D) A consumer finance company loan
Correct Answer: B
Rationale: A home equity line of credit (HELOC) is appropriate because the individual owns a
home with equity, has a manageable existing mortgage, and needs a two-year repayment
period. HELOCs typically offer lower interest rates than credit cards or consumer loans .
, SECTION 2: FINANCIAL PLANNING & INVESTMENT SERVICES
Question 5
A cost-sensitive individual utilizes an advisory firm for financial planning and investment
management with a conservative risk profile. The client pays $1,000 per year for a financial plan
and $100 per year in investment product expenses.
Which possible outcome can complicate this individual's expectations based on the risk profile
and needs?
A) Firm's allocation projecting a short investment time horizon
B) Firm recommendations not meeting investment risk appetite
C) Firm's fees exceeding overall investment returns
D) Firm's product offering increasing in cost annually
Correct Answer: C
Rationale: With a conservative risk profile, investment returns are typically modest. If the firm's
fees ($1,100 annually) exceed the investment returns, the individual's financial goals would be
undermined. This is especially problematic for cost-sensitive clients .
Question 6
Eva wants to use a comprehensive financial plan created by a certified planning professional to
make prudent budgeting decisions and achieve Eva's financial goals. Eva also wants to grow
surplus cash in a diversified, expertly managed portfolio.
Where should Eva go to get this service?
A) To an insurance company
B) To an investment bank
C) To a depository institution
D) To a brokerage firm
Correct Answer: B
Rationale: Investment banks offer comprehensive financial planning services and can provide
access to diversified, expertly managed portfolios. They have the expertise and resources for
sophisticated financial planning .
Question 7
What service do investment banks offer that commercial banks lack?
