WGU D363 PREASSESMENT QUESTIONS WITH 100% COMPLETE
ANSWERS| COMPREHENSIVE FINANCIAL PLANNING EXAM
LATEST UPDATE| ALREADY GRADED A+
Question 1
An individual wants to build up an emergency fund in a savings account.
Monthly expenses total $4,000, 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) $2,000
Rationale: Monthly surplus = $5,000 - $4,000 = $1,000. Over two months, the
individual can save $2,000 toward the emergency fund. The emergency fund
target
(2 months of income = $10,000) would require 10 months of saving, but the
question asks for the amount that can be saved (accumulated) in the context of
the two‑month period, which is $2,000.
Question 2
An individual wants to make a large purchase that will take two years to pay
off. The individual owns a home, earns $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?
A) A one-time credit card purchase
B) A home equity line of credit
1
,C) An early distribution from retirement accounts
D) A consumer finance company loan
Correct Answer: B) A home equity line of credit
Rationale: A HELOC offers lower interest rates than credit cards or consumer
loans, and avoids the penalties and taxes of early retirement distributions.
Given the individual has home equity and a manageable mortgage, a HELOC is the
most cost‑effective and appropriate financing method for a two‑year purchase.
Question 3
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) 1 year and 8 months
Rationale: Annual income = $60,000. Annual expenses = $3,200 × 12 = $38,400.
Annual surplus = $60,000 - $38,400 = $21,600. Total goal amount for one year:
$30,000 + $3,000 = $33,000. Time needed = $33,000 / $21,600 ≈ 1.53 years,
which is about 1 year and 6.4 months. The closest option is 1 year and 8 months
(1.67 years).
Question 4
2
,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) Firm's fees exceeding overall investment returns
Rationale: For a conservative investor, returns are typically modest. If total
annual fees ($1,100) exceed the investment return, the client will lose
purchasing power and fail to meet goals. This is a critical concern for cost‑
sensitive clients.
Question 5
Jack is a freelance technical writer receiving a 1099 form from every client
paying over $600, and Jack earns between $60,000 and $65,000 per year. Jack
also has increased monthly expenses to $4,000 per month, as spending needs
have
increased after Jack quit a job last year that paid $55,000 in W‑2 wages. How
should Jack modify financial planning around this employment change?
A) Fund an investment account to increase money available for future tax
payments
B) Maximize business deductions and aggregate savings for higher tax obligations
C) Maintain deductible expense spending to have the highest possible tax
write‑offs
3
, D) Make large cash donations to charitable causes to deduct against taxable
income
Correct Answer: B) Maximize business deductions and aggregate savings for
higher tax obligations
Rationale: As a self‑employed individual (1099), Jack is responsible for both
the employee and employer portions of FICA (self‑employment tax) in addition to
income tax. Maximizing legitimate business deductions reduces taxable income,
and setting aside savings specifically for taxes is essential to avoid cash
flow problems.
Question 6
An individual earns $75,000 annually. Monthly rent is $2,200, and 20% of
monthly cash income is spent on utilities, groceries, and transportation. To
pay off a credit card in six months, the client agrees to monthly payments of
$1,650. What is the monthly debt‑to‑income ratio?
A) 25.6
B) 26.4
C) 32.5
D) 33.2
Correct Answer: B) 26.4
Rationale: Monthly income = $75, = $6,250. The debt‑to‑income ratio
typically includes housing and other debt payments, but here the 20% for
utilities/groceries is not debt. The only debt payments are rent ($2,200) and
credit card ($1,650), which total $3,850. However, the provided answer of 26.4
is obtained by dividing only the credit card payment by monthly income:
$1,650 / $6,250 = 0.264 = 26.4%. Thus, the ratio is calculated based solely on
the credit card debt relative to gross income.
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ANSWERS| COMPREHENSIVE FINANCIAL PLANNING EXAM
LATEST UPDATE| ALREADY GRADED A+
Question 1
An individual wants to build up an emergency fund in a savings account.
Monthly expenses total $4,000, 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) $2,000
Rationale: Monthly surplus = $5,000 - $4,000 = $1,000. Over two months, the
individual can save $2,000 toward the emergency fund. The emergency fund
target
(2 months of income = $10,000) would require 10 months of saving, but the
question asks for the amount that can be saved (accumulated) in the context of
the two‑month period, which is $2,000.
Question 2
An individual wants to make a large purchase that will take two years to pay
off. The individual owns a home, earns $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?
A) A one-time credit card purchase
B) A home equity line of credit
1
,C) An early distribution from retirement accounts
D) A consumer finance company loan
Correct Answer: B) A home equity line of credit
Rationale: A HELOC offers lower interest rates than credit cards or consumer
loans, and avoids the penalties and taxes of early retirement distributions.
Given the individual has home equity and a manageable mortgage, a HELOC is the
most cost‑effective and appropriate financing method for a two‑year purchase.
Question 3
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) 1 year and 8 months
Rationale: Annual income = $60,000. Annual expenses = $3,200 × 12 = $38,400.
Annual surplus = $60,000 - $38,400 = $21,600. Total goal amount for one year:
$30,000 + $3,000 = $33,000. Time needed = $33,000 / $21,600 ≈ 1.53 years,
which is about 1 year and 6.4 months. The closest option is 1 year and 8 months
(1.67 years).
Question 4
2
,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) Firm's fees exceeding overall investment returns
Rationale: For a conservative investor, returns are typically modest. If total
annual fees ($1,100) exceed the investment return, the client will lose
purchasing power and fail to meet goals. This is a critical concern for cost‑
sensitive clients.
Question 5
Jack is a freelance technical writer receiving a 1099 form from every client
paying over $600, and Jack earns between $60,000 and $65,000 per year. Jack
also has increased monthly expenses to $4,000 per month, as spending needs
have
increased after Jack quit a job last year that paid $55,000 in W‑2 wages. How
should Jack modify financial planning around this employment change?
A) Fund an investment account to increase money available for future tax
payments
B) Maximize business deductions and aggregate savings for higher tax obligations
C) Maintain deductible expense spending to have the highest possible tax
write‑offs
3
, D) Make large cash donations to charitable causes to deduct against taxable
income
Correct Answer: B) Maximize business deductions and aggregate savings for
higher tax obligations
Rationale: As a self‑employed individual (1099), Jack is responsible for both
the employee and employer portions of FICA (self‑employment tax) in addition to
income tax. Maximizing legitimate business deductions reduces taxable income,
and setting aside savings specifically for taxes is essential to avoid cash
flow problems.
Question 6
An individual earns $75,000 annually. Monthly rent is $2,200, and 20% of
monthly cash income is spent on utilities, groceries, and transportation. To
pay off a credit card in six months, the client agrees to monthly payments of
$1,650. What is the monthly debt‑to‑income ratio?
A) 25.6
B) 26.4
C) 32.5
D) 33.2
Correct Answer: B) 26.4
Rationale: Monthly income = $75, = $6,250. The debt‑to‑income ratio
typically includes housing and other debt payments, but here the 20% for
utilities/groceries is not debt. The only debt payments are rent ($2,200) and
credit card ($1,650), which total $3,850. However, the provided answer of 26.4
is obtained by dividing only the credit card payment by monthly income:
$1,650 / $6,250 = 0.264 = 26.4%. Thus, the ratio is calculated based solely on
the credit card debt relative to gross income.
4
