Fpqp Questions And Verified Detailed Answers |Already Graded A+| 2024/2025 Update

Which of the following areas does a lender consider when evaluating a borrower? - ANSWER Capacity Character Collateral Conditions Step 3 of the financial planning process: Analysis? - ANSWER Determining possible alternative courses of action for the client Which one of the following best describes fulfilling a fiduciary responsibility? - ANSWER Always act in the client's best interest Which of the following are represented on a cash flow statement? - ANSWER Income Outflows Net worth calculated - ANSWER assets - liabilities Which of these are examples of the main reasons for using credit? - ANSWER Convenience Access to source of funds for an emergency front-end ratio - ANSWER front-end ratio considers principal, interest, taxes, and insurance (PITI) relative to gross annual income. Assuming all other things are equal, the present value of a future annual series of payments is - ANSWER reduced as the discount rate is increased. When discounting future payments into a present value, the present value amount will always be smaller the higher the discount rate. If John invests $10,000 into an account that will pay him 10% compounded monthly, how much will his account be worth in 20 years? - ANSWER Set calculator for 12 P/YR, end mode 10,000 +/- PV, 10 I/YR, 20 DOWNSHIFT N (240 compounding periods), solve for FV = $73,280.74 Penny is to receive $50,000 in five years from her deceased aunt's trust fund, but Penny would like the money now. Assuming that she currently can earn 9%, compounded annually on her investments, how much would she be willing to accept today in exchange for the $50,000 in five years? - ANSWER Set calculator for 1 P/YR, end mode 50000 FV, 9 I/YR, 5 N, solve for PV = $32,496.57. You plan to send your eight-year-old son to college in 10 years, and estimate you will need $80,000 at that time. How much do you need to save by the end of each year to achieve your goal, assuming you can earn 9%, compounded annually on invested funds? - ANSWER Set calculator for 1 P/YR, end mode 80000 FV, 10 N, 9 I/YR, solve for PMT = $5,265.61. Which of the following are types of systematic risk? - ANSWER Interest rate risk Market risk Which one of the following techniques is a way to reduce unsystematic risk? - ANSWER Diversify an investment portfolio. The measurement of a security's volatility relative to the market (as measured by the S&P 500) is that security's - ANSWER beta - measures a security's volatility relative to a benchmark such as a stock index. The advantages of investing in mutual funds include which of the following? - ANSWER Pooling of investors' funds Diversification Access to professional money managers Detailed recordkeeping of shareholder investments and transactions Joshua is considering two investments in a large-cap fund: Fund A with a three-year average return of 11.57% and a beta of 0.89, and Fund B with a three-year average return of 13.56% with a beta of 1.05. On a risk-adjusted basis, which fund should Joshua choose? - ANSWER A risk-adjusted return is calculated by dividing the mean return by beta. Fund A is 11.570.89 = 13.00%, Fund B is 13.561.05 = 12.91%. On a risk-adjusted basis, Fund A has the best return. Which of the following are potential returns an individual can achieve by investing in common stock? - ANSWER Dividends Capital appreciation A SWOT analysis would include - ANSWER strengths weaknesses opportunities threats Taxable income is defined as - ANSWER adjusted gross income (AGI) reduced by the greater of itemized deductions or the standard deduction. All of the following are possible reasons to invest in bond mutual funds - ANSWER diversification. professional management. interest income. a tax credit is the amount - ANSWER is a dollar-for-dollar offset against the income tax liability; thus, it is deducted directly from the tax liability.