AFC PREP EXAM PREP QUESTIONS AND
ANSWERS 2026 STUDY GUIDE
◉ Kim was injured in a freak accident in her dorm room and had to
spend several days in the hospital. Her covered medical costs totaled
$14,000. How much will Kim's health insurance policy pay for this
claim given the following policy information?
$250 deductible per year
80/20 coinsurance
$1,500 per year out-of-pocket coinsurance cap. Answer: $12,250
◉ Jeffrey invests $300 in his Roth IRA every month, regardless of the
market conditions. What strategy is Jeffrey utilizing? Answer: Dollar
cost averaging
◉ What do credit bureaus do? Answer: They collect and provide credit
information.
◉ Retirement investments can easily be made with. Answer: pretax
income.
,◉ One can lower insurance premiums by doing all of the following
EXCEPT. Answer: avoiding coinsurance.
◉ Jax, who is 27 years old, has always wanted a boat. He found one for
$20,000 and took money $30,000 out of his 401(k) to pay for it.
Assuming Jax is in the 25% tax bracket, how much will Jax pay in taxes
on his withdrawal? Answer: Answer: $10,500
Explanation: $30,000 x .25 = $7,500
10% early withdrawal penalty: $3,000
◉ Which of the following is not a way of reducing taxable income?
Answer: Reducing deductions
◉ Your client brings in this credit card statement. He knows paying the
minimum balance will take many years to pay off. How much does he
need to pay each month to pay the card off in 3 years? Answer: $37
(look at the minimum payment warning in the bottom right)
◉ In which chapter of bankruptcy does a trustee examine assets to
determine what can be sold for the benefit of creditors? Answer: Chapter
7
◉ Diana and Kim are roommates in college and Diana owes Kim for last
month's rent. When Diana receives a check from her mother for the rent,
, what type of endorsement should Diana use to sign this check over to
Kim? Answer: Special endorsement
◉ During a recession, people and business are likely to engage in
____________; meaning that their use of credit will decrease.. Answer:
deleveraging
◉ Your client wants to avoid Required Minimum Distributions during
retirement. Which of these accounts will allow him to meet that goal?
Answer: Roth IRA
◉ Jim spent $300 on some new clothes rather than using this money to
going to his college team's away game last weekend. The benefits of the
trip are the ____ cost of buying the clothing.. Answer: opportunity
◉ Jeff's minimum payment is $150 for his credit card. He has the
following balances and interest rates on his card:
Purchases $325 8%
Cash Advance $2,000 22%
Balance Transfer $800 $1.9%
Jeff has some extra money this month so he sends in $200. Which
balance does the $200 have to apply to? Answer: Cash Advance
◉ A cash advance can be obtained by using. Answer: bank credit card
accounts.
ANSWERS 2026 STUDY GUIDE
◉ Kim was injured in a freak accident in her dorm room and had to
spend several days in the hospital. Her covered medical costs totaled
$14,000. How much will Kim's health insurance policy pay for this
claim given the following policy information?
$250 deductible per year
80/20 coinsurance
$1,500 per year out-of-pocket coinsurance cap. Answer: $12,250
◉ Jeffrey invests $300 in his Roth IRA every month, regardless of the
market conditions. What strategy is Jeffrey utilizing? Answer: Dollar
cost averaging
◉ What do credit bureaus do? Answer: They collect and provide credit
information.
◉ Retirement investments can easily be made with. Answer: pretax
income.
,◉ One can lower insurance premiums by doing all of the following
EXCEPT. Answer: avoiding coinsurance.
◉ Jax, who is 27 years old, has always wanted a boat. He found one for
$20,000 and took money $30,000 out of his 401(k) to pay for it.
Assuming Jax is in the 25% tax bracket, how much will Jax pay in taxes
on his withdrawal? Answer: Answer: $10,500
Explanation: $30,000 x .25 = $7,500
10% early withdrawal penalty: $3,000
◉ Which of the following is not a way of reducing taxable income?
Answer: Reducing deductions
◉ Your client brings in this credit card statement. He knows paying the
minimum balance will take many years to pay off. How much does he
need to pay each month to pay the card off in 3 years? Answer: $37
(look at the minimum payment warning in the bottom right)
◉ In which chapter of bankruptcy does a trustee examine assets to
determine what can be sold for the benefit of creditors? Answer: Chapter
7
◉ Diana and Kim are roommates in college and Diana owes Kim for last
month's rent. When Diana receives a check from her mother for the rent,
, what type of endorsement should Diana use to sign this check over to
Kim? Answer: Special endorsement
◉ During a recession, people and business are likely to engage in
____________; meaning that their use of credit will decrease.. Answer:
deleveraging
◉ Your client wants to avoid Required Minimum Distributions during
retirement. Which of these accounts will allow him to meet that goal?
Answer: Roth IRA
◉ Jim spent $300 on some new clothes rather than using this money to
going to his college team's away game last weekend. The benefits of the
trip are the ____ cost of buying the clothing.. Answer: opportunity
◉ Jeff's minimum payment is $150 for his credit card. He has the
following balances and interest rates on his card:
Purchases $325 8%
Cash Advance $2,000 22%
Balance Transfer $800 $1.9%
Jeff has some extra money this month so he sends in $200. Which
balance does the $200 have to apply to? Answer: Cash Advance
◉ A cash advance can be obtained by using. Answer: bank credit card
accounts.
