FHCE FINAL EXAM QUESTIONS WITH COMPLETE SOLUTIONS!!
In the data gathering step of the financial planning process, there are two types of data. Which of the
following is an example of qualitative data? - (answer)Client would like to retire by age 65
Which of the following would not be included on the statement of cash flow? - (answer)Auto note
balance
What would be included on a statement of cash flow? - (answer)taxes, salaries, mortgage note payment,
interest income
You have prepared a financial plan for your client. Which of the following needs to be done next? -
(answer)Communicate the recommendations
A married client has fixed and variable expenses of $60,000 annually. The clients spouse who does not
work is the income beneficiary of large trust fund set up by her grandpa. How much should they have in
an emergency fund? - (answer)$15,000
single income-----6 months
double income----3 months
*This is single income because they have a large trust fund
Your client and his spouse have a gross income of $100,000 and a net income of $70,000 their house is
worth $150,000 and they have a mortgage balance of $120,000. Their mortgage payments are $1,012
per month, property taxes are $3,000 per year. They live in Florida and they have property insurance
coverage that costs $500 per year and flood insurance coverage that also costs $500 per year. What
percentage of gross income are their housing expenses? - (answer)They are 16.14% of gross income
-1,012 x 12 + 3,000 + 500 + 500 =16,144/100,000 = .1614 =16.14%
Which of the following professionals do not have to register with the SEC or the State where they do
business as a registered investment advisor if their advice is solely incidental to the primary business? -
(answer)an accountant
LATE
-lawyer
,FHCE FINAL EXAM QUESTIONS WITH COMPLETE SOLUTIONS!!
-accountant
-teacher
-engineer
*These don't need to register
Sandy has her series 6 and all applicable state insurance licenses. Which investment is she barred from
selling? - (answer)REITS
Series 6 is: mutual funds, UITs, insurance
Unemployment is increasing and business activity is decreasing. The business cycle is in what phase? -
(answer)contraction
the phases are: contraction and expansion
During prolonged periods of economic expansion, interest rates can be expected to: - (answer)Increase
Which of the following is true about the Gross Domestic Product (GDP)? - (answer)it includes cars built
by Porsche in Georgia
*GDP is all about place of production
CPI is a good measure of ________ - (answer)inflation
The economy has just through 12 months of economic decline. The business cycle is in what phase? -
(answer)Recession
-recession is 2 quarters and depression is 6 quarters
A tenancy by the entirety may be terminated in which of the following ways - (answer)mutual
agreement by both spouses
death of either spouse
, FHCE FINAL EXAM QUESTIONS WITH COMPLETE SOLUTIONS!!
divorce settlement
Which of the following assets are liquid? - (answer)savings account, money market account and treasury
bill
A yield curve has bonds with: - (answer)The same tax status and same quality and different maturities
STRIPS are normally created by: - (answer)dealers in government securities
Sammy lives in NYC. His federal tax bracket is the 35% bracket, his NY state tax is 7% and his new city tax
is 3%. He bought some NY municipal bonds with a 6% coupon. All other factors being equal, what
normal interest rate should he be willing to accept on a corporation bond? - (answer)6/ (1-.35-.07-.03) =
10.9%
nominal interest rate= N(bond)/ (1-MTR-STR-LTR)
What is the least risky to the riskiest? - (answer)t-bills, savings account or cds, money market mutual
funds, tax free money markets, treasury bonds
On July 30th, an XYZ Dec 55 Call has a premium of $6.50 and XYZ shares have a market price of $58.
What is IV and the time value? - (answer)58-55=3
6.50= 3 + 3.50
Premium= intrinsic value + time value
Intrinsic value= MP-EP
Your client sells a naked call on ABC Corp for a premium of $375. He then calls to ask about the risk.
What should you tell him? - (answer)There is theoretically unlimited loss potential
How many additional shares of company stock does an investor get when a 3-2 stock split is declared
and she owns 100 shares? - (answer)50 shares
-Just divide by 2
In the data gathering step of the financial planning process, there are two types of data. Which of the
following is an example of qualitative data? - (answer)Client would like to retire by age 65
Which of the following would not be included on the statement of cash flow? - (answer)Auto note
balance
What would be included on a statement of cash flow? - (answer)taxes, salaries, mortgage note payment,
interest income
You have prepared a financial plan for your client. Which of the following needs to be done next? -
(answer)Communicate the recommendations
A married client has fixed and variable expenses of $60,000 annually. The clients spouse who does not
work is the income beneficiary of large trust fund set up by her grandpa. How much should they have in
an emergency fund? - (answer)$15,000
single income-----6 months
double income----3 months
*This is single income because they have a large trust fund
Your client and his spouse have a gross income of $100,000 and a net income of $70,000 their house is
worth $150,000 and they have a mortgage balance of $120,000. Their mortgage payments are $1,012
per month, property taxes are $3,000 per year. They live in Florida and they have property insurance
coverage that costs $500 per year and flood insurance coverage that also costs $500 per year. What
percentage of gross income are their housing expenses? - (answer)They are 16.14% of gross income
-1,012 x 12 + 3,000 + 500 + 500 =16,144/100,000 = .1614 =16.14%
Which of the following professionals do not have to register with the SEC or the State where they do
business as a registered investment advisor if their advice is solely incidental to the primary business? -
(answer)an accountant
LATE
-lawyer
,FHCE FINAL EXAM QUESTIONS WITH COMPLETE SOLUTIONS!!
-accountant
-teacher
-engineer
*These don't need to register
Sandy has her series 6 and all applicable state insurance licenses. Which investment is she barred from
selling? - (answer)REITS
Series 6 is: mutual funds, UITs, insurance
Unemployment is increasing and business activity is decreasing. The business cycle is in what phase? -
(answer)contraction
the phases are: contraction and expansion
During prolonged periods of economic expansion, interest rates can be expected to: - (answer)Increase
Which of the following is true about the Gross Domestic Product (GDP)? - (answer)it includes cars built
by Porsche in Georgia
*GDP is all about place of production
CPI is a good measure of ________ - (answer)inflation
The economy has just through 12 months of economic decline. The business cycle is in what phase? -
(answer)Recession
-recession is 2 quarters and depression is 6 quarters
A tenancy by the entirety may be terminated in which of the following ways - (answer)mutual
agreement by both spouses
death of either spouse
, FHCE FINAL EXAM QUESTIONS WITH COMPLETE SOLUTIONS!!
divorce settlement
Which of the following assets are liquid? - (answer)savings account, money market account and treasury
bill
A yield curve has bonds with: - (answer)The same tax status and same quality and different maturities
STRIPS are normally created by: - (answer)dealers in government securities
Sammy lives in NYC. His federal tax bracket is the 35% bracket, his NY state tax is 7% and his new city tax
is 3%. He bought some NY municipal bonds with a 6% coupon. All other factors being equal, what
normal interest rate should he be willing to accept on a corporation bond? - (answer)6/ (1-.35-.07-.03) =
10.9%
nominal interest rate= N(bond)/ (1-MTR-STR-LTR)
What is the least risky to the riskiest? - (answer)t-bills, savings account or cds, money market mutual
funds, tax free money markets, treasury bonds
On July 30th, an XYZ Dec 55 Call has a premium of $6.50 and XYZ shares have a market price of $58.
What is IV and the time value? - (answer)58-55=3
6.50= 3 + 3.50
Premium= intrinsic value + time value
Intrinsic value= MP-EP
Your client sells a naked call on ABC Corp for a premium of $375. He then calls to ask about the risk.
What should you tell him? - (answer)There is theoretically unlimited loss potential
How many additional shares of company stock does an investor get when a 3-2 stock split is declared
and she owns 100 shares? - (answer)50 shares
-Just divide by 2
