Finance final
Properly stated financial goals should contain each of these factors - answer amount,
time, purpose
r=the front-end ratio (debt-to-income) should be - answerless than our equal to 28% of
gross income
For a high severity high probability event, what should be the preferred risk
management strategy - answer risk reduction and risk avoidance
An investment of $6,00 earning 6.4% per year will be worth ___ in 4 years -
answer$7,690
The ethical principles of diligence for the Financial Paraplanner Qualified Professional
(FPQP) i most closely summarized by which statement - answerConduct of a financial
planner that reflects timely response to reasonable client inquiries
You want to have $30,000 two years from today to buy a new car. You start investing
one month from today with your first payment. You decide on an annual rate of return of
2.4%. What is the monthly payment you need to achieve your goal in 2 years? -
answer$1,221
Best describe the components necessary to become a CFP professional -
answerSuccessful completion of the education, exam, experience and ethics
requirement
According to the CFFP, what is a good minimus Savings ratio as a Percent of total
income - answer10%
What is the major difference between insurance and brokers? - answerAn agent can
bind the insurance company, but a broker cannot
You just got a $350,000 loan for 30 years to buy a home. What is your monthly
mortgage payment (principal + interest) if the annual interest rate is 4.8%? - answernot
$1400
Which is an example of "fee-only" financial planning - answernot "getting a commission
for the sale of a financial product and an advisory fee for managing money"
What is the acceptable level of housing costs as a percentage of gross Income -
answer28% or less
,What is the major difference between a stock and a mutual insurance company -
answernot stock companies distribute their dividends to policyholders
Which is included in systematic risk? - answerinterest rate risk
determining the appropriate asset allocation for the achieving a client goal should take
place in what step of the financial planning process - answerStep 4: developing the
financial planning considerations
What would be the appropriate price movement if a mutual find has a beta of 1.07 and
the benchmark it is being compared to (eg S&P 500) has a return of a minus 7.6% -
answer8.13%
What benefit do umbrella insurance policies have for policyholders - answernot all the
above
Mutual find a has a return of 14.2% and a beta of 1.26. Mutual fund b has a return of
9.5% and a beta of .76. for a risk-adjusted return which mutual fund should be chosen?
- answerMutual fund b because risk-adjusted ratio is 12.5 vs a at 11.27
a coininsurnace penalty for dwelling coverage on a homeowners insurance contract is
intended to have what impact? - answerto incentivize the homeowner to have adequate
coverage to repair or rebuild a dwelling or other structures
Assume today is May 1. How much money needs to be invested starting today, as the
beginning of each month for 17 months, to have FV of $11,500? You use an annual rate
of return of 6.6% - answer$643
best reflects a fiduciary standard of care - answerputting the client first
You decide on 15-year $310,000 mortgage at an annual interest rate of 3.8%. What is
your monthly mortgage payment (principal plus interest) - answernot 1,854
A bond pays $55 per year in annual interest. what is the coupon rate - answer5.5%
Which of the following is a best practice when approaching financial planning? -
answerreevaluating financial plans periodically
Best example of a moral hazard in insurance - answerlying about getting hurt in order to
claim disability insurance
You purchased a mutual find 4 years ago with an investment of $8,000. Today because
of covid-19, it is worth only $7,500 what is your compounded annual average rate of
return over the last 4 years? - answer1.6%
4 major asset classes - answercash, cash equivalents, bonds
, What is the current level of insured deposits per account by the federal deposit
insurance corporation FDIC - answer$250,000
Regarding a strategy of carrying a high deductible for collision on your auto insurance? -
answerHaving a high deductible for collision coverage is desirable as it creates an
incentive for the insured to drive more carefully
Features of an insurance contract - answerthere is a need for an insurable interest at
the time of loss, insurance is a unilateral agreement between the insurance company
and the insured, insurance contracts can have riders or endorsements that supplement
the basic coverage
During step 3 of the financial planning process, "Analyzing the client's current course of
action and potential alternative courses(s) of action...", which are possible "red flags"
the planner may encounter? - answerinsufficient liquid assets, mismatches between the
clients time horizon and stated goals, non-advantageous tilting of assets and not
naming beneficiaries
What are the 2 components of total return for stocks and bonds - answercapital
appreciation and dividends/interest
Characteristic of bonds - answercallable bonds, coupon rate, credit ratings
How much debt a company uses is an example of what type of unsystematic risk -
answerfinancial risk
if you think interest rates are going to increase, then you would want a duration of
_____ years for your bond - answernot six
ETSs are _____ marketable when compared to mutual funds - answermore
A 4% coupon bond has 7 years left to maturity. If interest rates increase to 5%, what is
the current value of the bond? assume coupon is paid semiannually - answer$942
A 4% coupon bond has 7 years left to maturity. If interest rates decrease to 3%, what is
the current value of the bond? assume coupon is paid semiannually - answer1063
if you predict a rise in stock prices which beta would you prefer - answernot <1
A portfolio has a return of 7.2%. Risk-free rate is 1.2%, and a standard deviation of
11.8%. what is the sharpe ratio - answer0.51
A client is seeking guidance in all areas of financial planning. Which of the following
most closely describes the type of financial planning the client wants? -
answerComprehensive planning
Properly stated financial goals should contain each of these factors - answer amount,
time, purpose
r=the front-end ratio (debt-to-income) should be - answerless than our equal to 28% of
gross income
For a high severity high probability event, what should be the preferred risk
management strategy - answer risk reduction and risk avoidance
An investment of $6,00 earning 6.4% per year will be worth ___ in 4 years -
answer$7,690
The ethical principles of diligence for the Financial Paraplanner Qualified Professional
(FPQP) i most closely summarized by which statement - answerConduct of a financial
planner that reflects timely response to reasonable client inquiries
You want to have $30,000 two years from today to buy a new car. You start investing
one month from today with your first payment. You decide on an annual rate of return of
2.4%. What is the monthly payment you need to achieve your goal in 2 years? -
answer$1,221
Best describe the components necessary to become a CFP professional -
answerSuccessful completion of the education, exam, experience and ethics
requirement
According to the CFFP, what is a good minimus Savings ratio as a Percent of total
income - answer10%
What is the major difference between insurance and brokers? - answerAn agent can
bind the insurance company, but a broker cannot
You just got a $350,000 loan for 30 years to buy a home. What is your monthly
mortgage payment (principal + interest) if the annual interest rate is 4.8%? - answernot
$1400
Which is an example of "fee-only" financial planning - answernot "getting a commission
for the sale of a financial product and an advisory fee for managing money"
What is the acceptable level of housing costs as a percentage of gross Income -
answer28% or less
,What is the major difference between a stock and a mutual insurance company -
answernot stock companies distribute their dividends to policyholders
Which is included in systematic risk? - answerinterest rate risk
determining the appropriate asset allocation for the achieving a client goal should take
place in what step of the financial planning process - answerStep 4: developing the
financial planning considerations
What would be the appropriate price movement if a mutual find has a beta of 1.07 and
the benchmark it is being compared to (eg S&P 500) has a return of a minus 7.6% -
answer8.13%
What benefit do umbrella insurance policies have for policyholders - answernot all the
above
Mutual find a has a return of 14.2% and a beta of 1.26. Mutual fund b has a return of
9.5% and a beta of .76. for a risk-adjusted return which mutual fund should be chosen?
- answerMutual fund b because risk-adjusted ratio is 12.5 vs a at 11.27
a coininsurnace penalty for dwelling coverage on a homeowners insurance contract is
intended to have what impact? - answerto incentivize the homeowner to have adequate
coverage to repair or rebuild a dwelling or other structures
Assume today is May 1. How much money needs to be invested starting today, as the
beginning of each month for 17 months, to have FV of $11,500? You use an annual rate
of return of 6.6% - answer$643
best reflects a fiduciary standard of care - answerputting the client first
You decide on 15-year $310,000 mortgage at an annual interest rate of 3.8%. What is
your monthly mortgage payment (principal plus interest) - answernot 1,854
A bond pays $55 per year in annual interest. what is the coupon rate - answer5.5%
Which of the following is a best practice when approaching financial planning? -
answerreevaluating financial plans periodically
Best example of a moral hazard in insurance - answerlying about getting hurt in order to
claim disability insurance
You purchased a mutual find 4 years ago with an investment of $8,000. Today because
of covid-19, it is worth only $7,500 what is your compounded annual average rate of
return over the last 4 years? - answer1.6%
4 major asset classes - answercash, cash equivalents, bonds
, What is the current level of insured deposits per account by the federal deposit
insurance corporation FDIC - answer$250,000
Regarding a strategy of carrying a high deductible for collision on your auto insurance? -
answerHaving a high deductible for collision coverage is desirable as it creates an
incentive for the insured to drive more carefully
Features of an insurance contract - answerthere is a need for an insurable interest at
the time of loss, insurance is a unilateral agreement between the insurance company
and the insured, insurance contracts can have riders or endorsements that supplement
the basic coverage
During step 3 of the financial planning process, "Analyzing the client's current course of
action and potential alternative courses(s) of action...", which are possible "red flags"
the planner may encounter? - answerinsufficient liquid assets, mismatches between the
clients time horizon and stated goals, non-advantageous tilting of assets and not
naming beneficiaries
What are the 2 components of total return for stocks and bonds - answercapital
appreciation and dividends/interest
Characteristic of bonds - answercallable bonds, coupon rate, credit ratings
How much debt a company uses is an example of what type of unsystematic risk -
answerfinancial risk
if you think interest rates are going to increase, then you would want a duration of
_____ years for your bond - answernot six
ETSs are _____ marketable when compared to mutual funds - answermore
A 4% coupon bond has 7 years left to maturity. If interest rates increase to 5%, what is
the current value of the bond? assume coupon is paid semiannually - answer$942
A 4% coupon bond has 7 years left to maturity. If interest rates decrease to 3%, what is
the current value of the bond? assume coupon is paid semiannually - answer1063
if you predict a rise in stock prices which beta would you prefer - answernot <1
A portfolio has a return of 7.2%. Risk-free rate is 1.2%, and a standard deviation of
11.8%. what is the sharpe ratio - answer0.51
A client is seeking guidance in all areas of financial planning. Which of the following
most closely describes the type of financial planning the client wants? -
answerComprehensive planning
