RFP -Intro to Financial Planning Final Exam Prep
Graded A+
Correct
Incorrect
1 of 50
Term
Recently, Fallon, an avid shopper, has heard from her friends that an
investment in Shoes-2-You stock was a wise idea because the shoes
sold are very stylish. Even though Fallon's financial planner has advised
her that investing in this stock is a poor decision, she invests in it
anyway. Her brother, Stanley, congratulates her on her investment
because he feels it is a wise investment. Stanley considers himself to be
an expert in investments. Unfortunately, he considers his expertise to
be much greater than it actually is. In the past, Stanley has taken credit
for any investment decisions that have positive returns but blames the
economy when an investment does poorly. Considering Fallon's and
Stanley's behavior, which of the following statements is CORRECT?
Give this one a try later!
, Fallon's behavior is an example Both I and II
of confirmation bias; Stanley's
behavior is representative of
overconfidence.
All of the statements are true I only
Don't know?
2 of 50
Term
Charley invested $100,000 12 years ago. Today, it is valued at $250,000.
What is the rate of return Charley's investment?
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7.93% 5.00%
10.00% 12.50%
Don't know?
3 of 50
Term
Which of the following statements regarding a financial planner's
analysis of a client's cash flow statement is CORRECT?
I. The analysis of the client's cash flow statement can help the planner
,determine whether the client is living within his financial means.
II. The analysis of the client's cash flow statement helps determine the
client's net worth, or total cash surplus, by tracking cash inflows and
outflows over a period of time.
III. Typically, the financial planner will encourage the client to reduce
the variable expenses reported on the cash flow statement.
Give this one a try later!
I, II, and III III and IV
I, II, & III I and III
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4 of 50
Term
You have gathered the following information from Edgar's financial
statements:
Net income $75,000
Gross income $110,000
Total assets $190,000
Total debt $45,000
Consumer debt $20,000
Based on this information, which of the following statements is
CORRECT?
, I. Edgar's total debt ratio exceeds the generally recommended
maximum.
II. Edgar's consumer debt ratio exceeds the generally recommended
maximum.
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I, II, & III I, II, and III
Both I and II III and IV
Don't know?
5 of 50
Term
As a financial planner you must be familiar with several different
economic and interest rates, and how to use them in calculations that
are important to your clients. Assume the following rates:
Prime rate 5.5% Interest rate − Investment A 8.0%
Inflation rate 2.5% Discount rate 2.0%
Considering all the interest rates above, calculate the inflation-
adjusted return for investment A.
Give this one a try later!
Graded A+
Correct
Incorrect
1 of 50
Term
Recently, Fallon, an avid shopper, has heard from her friends that an
investment in Shoes-2-You stock was a wise idea because the shoes
sold are very stylish. Even though Fallon's financial planner has advised
her that investing in this stock is a poor decision, she invests in it
anyway. Her brother, Stanley, congratulates her on her investment
because he feels it is a wise investment. Stanley considers himself to be
an expert in investments. Unfortunately, he considers his expertise to
be much greater than it actually is. In the past, Stanley has taken credit
for any investment decisions that have positive returns but blames the
economy when an investment does poorly. Considering Fallon's and
Stanley's behavior, which of the following statements is CORRECT?
Give this one a try later!
, Fallon's behavior is an example Both I and II
of confirmation bias; Stanley's
behavior is representative of
overconfidence.
All of the statements are true I only
Don't know?
2 of 50
Term
Charley invested $100,000 12 years ago. Today, it is valued at $250,000.
What is the rate of return Charley's investment?
Give this one a try later!
7.93% 5.00%
10.00% 12.50%
Don't know?
3 of 50
Term
Which of the following statements regarding a financial planner's
analysis of a client's cash flow statement is CORRECT?
I. The analysis of the client's cash flow statement can help the planner
,determine whether the client is living within his financial means.
II. The analysis of the client's cash flow statement helps determine the
client's net worth, or total cash surplus, by tracking cash inflows and
outflows over a period of time.
III. Typically, the financial planner will encourage the client to reduce
the variable expenses reported on the cash flow statement.
Give this one a try later!
I, II, and III III and IV
I, II, & III I and III
Don't know?
4 of 50
Term
You have gathered the following information from Edgar's financial
statements:
Net income $75,000
Gross income $110,000
Total assets $190,000
Total debt $45,000
Consumer debt $20,000
Based on this information, which of the following statements is
CORRECT?
, I. Edgar's total debt ratio exceeds the generally recommended
maximum.
II. Edgar's consumer debt ratio exceeds the generally recommended
maximum.
Give this one a try later!
I, II, & III I, II, and III
Both I and II III and IV
Don't know?
5 of 50
Term
As a financial planner you must be familiar with several different
economic and interest rates, and how to use them in calculations that
are important to your clients. Assume the following rates:
Prime rate 5.5% Interest rate − Investment A 8.0%
Inflation rate 2.5% Discount rate 2.0%
Considering all the interest rates above, calculate the inflation-
adjusted return for investment A.
Give this one a try later!
