HS 300 Exam Review Questions with
Correct Answers
For SEC registration purposes, which act sets the limit for assets under management? -
ANSWER✔️✔️-The Investment Advisors Act
What is an appropriate investment for an emergency fund? - ANSWER✔️✔️-A money market
mutual fund.
What is the yield to maturity of a $1,000 face amount bond that currently sells for $875, pays $60 of
interest at the end of each year, and matures in 10 years? - ANSWER✔️✔️-7.85%
Keystrokes: 1000FV, 875+/-PV, 60PMT, 10N; I/yr
According to a consumer survey conducted by the CFP Board of Standards, the top reason why
people begin financial planning is to: - ANSWER✔️✔️-Build and liquidate a retirement fund.
A financial service professional would devise client recommendations during which domain of
financial planning? - ANSWER✔️✔️-Developing recommendations
How do you calculate the liquidity ratio? - ANSWER✔️✔️-Liquid Assets / total current debts
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
, How do you calculate the debt service ratio? - ANSWER✔️✔️-Total debt payments / gross
income
How do you calculate the solvency ratio? - ANSWER✔️✔️-Net Worth / Total Assets
How do you calculate the savings ratio? - ANSWER✔️✔️-Net cash flow + Savings and
investments / annual after-tax income
A comprehensive financial plan organized to follow the financial planning process should start by: -
ANSWER✔️✔️-Specifying the responsibilities of each party for implementing the plan and
carrying it through to completion.
When calculating the liquidity ratio, if the top of the equation is liquid assets, what does the
denominator of the equation consist of? - ANSWER✔️✔️-Short term liabilities (credit card debt
included)
How much should an investor be willing to pay for a bond that pays $25 of interest every 6 months
for the next 3 years and the $1,000 face amount at the end of 3 years if the investor requires a yield
to maturity of 8%? - ANSWER✔️✔️-$921.37
Keystrokes: 2P/Yr, 3xP/Yr, 25PMT, 1000FV, 8 i/yr; PV
Dave has a credit card balance of $20,000, which carries an APR of 20%. He pays $400 per month
towards retiring the balance. How long will it take Dave to reduce the balance to $0? -
ANSWER✔️✔️-9.03 years
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
Correct Answers
For SEC registration purposes, which act sets the limit for assets under management? -
ANSWER✔️✔️-The Investment Advisors Act
What is an appropriate investment for an emergency fund? - ANSWER✔️✔️-A money market
mutual fund.
What is the yield to maturity of a $1,000 face amount bond that currently sells for $875, pays $60 of
interest at the end of each year, and matures in 10 years? - ANSWER✔️✔️-7.85%
Keystrokes: 1000FV, 875+/-PV, 60PMT, 10N; I/yr
According to a consumer survey conducted by the CFP Board of Standards, the top reason why
people begin financial planning is to: - ANSWER✔️✔️-Build and liquidate a retirement fund.
A financial service professional would devise client recommendations during which domain of
financial planning? - ANSWER✔️✔️-Developing recommendations
How do you calculate the liquidity ratio? - ANSWER✔️✔️-Liquid Assets / total current debts
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
, How do you calculate the debt service ratio? - ANSWER✔️✔️-Total debt payments / gross
income
How do you calculate the solvency ratio? - ANSWER✔️✔️-Net Worth / Total Assets
How do you calculate the savings ratio? - ANSWER✔️✔️-Net cash flow + Savings and
investments / annual after-tax income
A comprehensive financial plan organized to follow the financial planning process should start by: -
ANSWER✔️✔️-Specifying the responsibilities of each party for implementing the plan and
carrying it through to completion.
When calculating the liquidity ratio, if the top of the equation is liquid assets, what does the
denominator of the equation consist of? - ANSWER✔️✔️-Short term liabilities (credit card debt
included)
How much should an investor be willing to pay for a bond that pays $25 of interest every 6 months
for the next 3 years and the $1,000 face amount at the end of 3 years if the investor requires a yield
to maturity of 8%? - ANSWER✔️✔️-$921.37
Keystrokes: 2P/Yr, 3xP/Yr, 25PMT, 1000FV, 8 i/yr; PV
Dave has a credit card balance of $20,000, which carries an APR of 20%. He pays $400 per month
towards retiring the balance. How long will it take Dave to reduce the balance to $0? -
ANSWER✔️✔️-9.03 years
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
