AFC Questions with CORRECT Answers
Question:
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
Question:
Jeffrey invests $300 in his Roth IRA every month, regardless of the market conditions.
What strategy is Jeffrey utilizing?
Answer:
Dollar cost averaging
Question:
One can lower insurance premiums by doing all of the following EXCEPT
Answer:
avoiding coinsurance.
Question:
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:
$10,500 Explanation: $30,000 x .25 = $7,500 10% early withdrawal penalty: $3,000
Question:
Which of the following is not a way of reducing taxable income?
Answer:
Reducing deductions
,Question:
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)
Question:
In which chapter of bankruptcy does a trustee examine assets to determine what can be
sold for the benefit of creditors?
Answer:
Chapter 7
Question:
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
Question:
During a recession, people and business are likely to engage in ____________; meaning
that their use of credit will decrease.
Answer:
deleveraging
Question:
Your client wants to avoid Required Minimum Distributions during retirement. Which of
these accounts will allow him to meet that goal?
Answer:
Roth IRA
, Question:
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
Question:
A cash advance can be obtained by using
Answer:
bank credit card accounts.
Question:
Put these steps in the correct order: Goal Setting Generating Solutions Establish an
action plan Implement plan Monitor plan
Answer:
Correct Order: 1) Goal Setting 2) Generating Solutions 3) Establish an action plan 4)
Implement plan 5) Monitor plan
Question:
Blaine and Lindsay McDonald have total assets valued at $346,000 and total debt of
$168,000. What is Blaine and Lindsay's asset-to-debt ratio?
Answer:
2.06 Explanation: 346000/168000 = 2.06
Question:
Hillary and Justin Palmer have a longterm goal of saving $6,000 for a down payment on
a new vehicle they would like to buy in three years. Which of the following is a
shortterm goal that is most consistent with this long-term goal?
Answer:
Save $2,000 this year
Question:
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
Question:
Jeffrey invests $300 in his Roth IRA every month, regardless of the market conditions.
What strategy is Jeffrey utilizing?
Answer:
Dollar cost averaging
Question:
One can lower insurance premiums by doing all of the following EXCEPT
Answer:
avoiding coinsurance.
Question:
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:
$10,500 Explanation: $30,000 x .25 = $7,500 10% early withdrawal penalty: $3,000
Question:
Which of the following is not a way of reducing taxable income?
Answer:
Reducing deductions
,Question:
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)
Question:
In which chapter of bankruptcy does a trustee examine assets to determine what can be
sold for the benefit of creditors?
Answer:
Chapter 7
Question:
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
Question:
During a recession, people and business are likely to engage in ____________; meaning
that their use of credit will decrease.
Answer:
deleveraging
Question:
Your client wants to avoid Required Minimum Distributions during retirement. Which of
these accounts will allow him to meet that goal?
Answer:
Roth IRA
, Question:
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
Question:
A cash advance can be obtained by using
Answer:
bank credit card accounts.
Question:
Put these steps in the correct order: Goal Setting Generating Solutions Establish an
action plan Implement plan Monitor plan
Answer:
Correct Order: 1) Goal Setting 2) Generating Solutions 3) Establish an action plan 4)
Implement plan 5) Monitor plan
Question:
Blaine and Lindsay McDonald have total assets valued at $346,000 and total debt of
$168,000. What is Blaine and Lindsay's asset-to-debt ratio?
Answer:
2.06 Explanation: 346000/168000 = 2.06
Question:
Hillary and Justin Palmer have a longterm goal of saving $6,000 for a down payment on
a new vehicle they would like to buy in three years. Which of the following is a
shortterm goal that is most consistent with this long-term goal?
Answer:
Save $2,000 this year
