FPQP Exam Questions with Correct Answers 100% Verified By Experts| Latest Update
Guaranteed Success
Personal Financial Planning the process of determining whether and how an individual can
meet life goals through the proper management of financial resources
fundamental areas of financial planning cash management and use of debt
management of personal risk and insurance
investments
retirement planning
tax implications of financial planning
estate planning
FPQP standards of professional conduct integrity
objectivity
competency
confidentiality
professionalism
Fiduciary Standard 5 responsibilities 1. to put client's interests first
2. to act with upmost good faith
.3. to provide full & adequate disclosure of all material facts
4. not to mislead clients
5. to expose all conflicts of interest
3 basic financial statements statement of financial planning
cash flow statement
budget (pro forma)
,statement of financial position STATIC - considers assets and liabilities at a certain point in
time and can determine net worth
Cash flow statement records cash inflows and outflows over a period of time
net worth assets minus liabilities
cash/cash equivalents readily converted to cash without losing principal
ex. checking/savings, CDs, money market funds, life insurnance cash values
investment asset examples stocks, bonds, mutual funds, etfs, Real estate, precious metals
Use asset examples residence, automobiles, boats, etc.
Areas to Evalutate emergency fund
level of debt
level of savings
diversification of assets
retirement prep
tax issues
PITI principal, interest, taxes, insurance
Front end debt ratio 28% or less
,back end debt ratio 36% or less
non-mortgage debt ratio 20% or less
5 Cs of credit character
capacity
capital
collateral
conditions
Fair and Accurate Credit Transactions Act gives consumers the right to request a free copy of
their credit report every year.
Types of credit Revolving and Installment
lien legal right to obtain property if borrower defaults on loan
Ammortization process of paying off debt by making periodic payments
Direct Unsubsidized Student Loans not needs based, for under grad and prof students, fixed
at 6.6%
Direct Subsidized Student Loans need based, only for undergrad
parent plus student loans not needs based, unlimited amount, fixed at 7%
Primary advantage of owning home over renting tax break and potential appreciation
, Fair Credit Billing Act A law that sets requirements for resolving billing disputes
Equal Credit Opportunity Act Gives all applicants the same rights. Credit providers may not
discriminate based on: Age, Social Security, Housing loans.
Fair Debt Collection Practices Act (FDCPA) Prohibits certain practices by debt collectors
Chapter 7 Bankruptcy immediate liquidation of available assets and cancel remaining debts
Chapter 13 Bankruptcy The wage earners plan of bankruptcy, wherein debtors keep all of
their property and repay a portion of their debts over a period of time under a court enforced
plan
Sole Proprietorship liable for all obligations
General Partnership unlimited personal liability
limited partnership restricted to only investment of partnership
family partnership like limited, but within family for estate and tax planning purposes
C Corp Subject to dual taxation, taxed as income for shareholders, limited liability, true
corporation
S Corp Taxed at corporation before dividends go to shareholders, smaller than C Corp
Guaranteed Success
Personal Financial Planning the process of determining whether and how an individual can
meet life goals through the proper management of financial resources
fundamental areas of financial planning cash management and use of debt
management of personal risk and insurance
investments
retirement planning
tax implications of financial planning
estate planning
FPQP standards of professional conduct integrity
objectivity
competency
confidentiality
professionalism
Fiduciary Standard 5 responsibilities 1. to put client's interests first
2. to act with upmost good faith
.3. to provide full & adequate disclosure of all material facts
4. not to mislead clients
5. to expose all conflicts of interest
3 basic financial statements statement of financial planning
cash flow statement
budget (pro forma)
,statement of financial position STATIC - considers assets and liabilities at a certain point in
time and can determine net worth
Cash flow statement records cash inflows and outflows over a period of time
net worth assets minus liabilities
cash/cash equivalents readily converted to cash without losing principal
ex. checking/savings, CDs, money market funds, life insurnance cash values
investment asset examples stocks, bonds, mutual funds, etfs, Real estate, precious metals
Use asset examples residence, automobiles, boats, etc.
Areas to Evalutate emergency fund
level of debt
level of savings
diversification of assets
retirement prep
tax issues
PITI principal, interest, taxes, insurance
Front end debt ratio 28% or less
,back end debt ratio 36% or less
non-mortgage debt ratio 20% or less
5 Cs of credit character
capacity
capital
collateral
conditions
Fair and Accurate Credit Transactions Act gives consumers the right to request a free copy of
their credit report every year.
Types of credit Revolving and Installment
lien legal right to obtain property if borrower defaults on loan
Ammortization process of paying off debt by making periodic payments
Direct Unsubsidized Student Loans not needs based, for under grad and prof students, fixed
at 6.6%
Direct Subsidized Student Loans need based, only for undergrad
parent plus student loans not needs based, unlimited amount, fixed at 7%
Primary advantage of owning home over renting tax break and potential appreciation
, Fair Credit Billing Act A law that sets requirements for resolving billing disputes
Equal Credit Opportunity Act Gives all applicants the same rights. Credit providers may not
discriminate based on: Age, Social Security, Housing loans.
Fair Debt Collection Practices Act (FDCPA) Prohibits certain practices by debt collectors
Chapter 7 Bankruptcy immediate liquidation of available assets and cancel remaining debts
Chapter 13 Bankruptcy The wage earners plan of bankruptcy, wherein debtors keep all of
their property and repay a portion of their debts over a period of time under a court enforced
plan
Sole Proprietorship liable for all obligations
General Partnership unlimited personal liability
limited partnership restricted to only investment of partnership
family partnership like limited, but within family for estate and tax planning purposes
C Corp Subject to dual taxation, taxed as income for shareholders, limited liability, true
corporation
S Corp Taxed at corporation before dividends go to shareholders, smaller than C Corp
