FP100T Week 5 New Set

Question 1
The over-the-counter (OTC) securities market is a/ an

physical location used by companies to buy back securities from the public.
physical location for trading securities through securities dealers.
electronic securities market where securities are bought and sold.
electronic network used by corporations to sell securities to the general public.

Question 2
A common shareholder's claim on a company's assets is residual, meaning the shareholder has a right to share in the assets and income of the corporation only after higher priority claims from ________ are satisfied.

all the stakeholders
bond holders
preferred shareholders
creditors

Question 3
A company with market capitalization of $1.5 billion is considered a
mid-cap company.
large-cap company.
micro-cap company.
small-cap company.

Question 4
Bonds that are rated BBB or better by Standard & Poor's are referred to as
risk-free bonds.
junk bonds.
recession-proof bonds.
investment-grade bonds.

Question 5
A measure of market or non-diversifiable risk is the
coefficient of variation.
variation.
beta.
standard deviation.

Question 6
Which of the following is a disadvantage of common stock ownership?
No management control
Low interest-rate sensitivity
High potential long-run returns
Liquidity

Question 7
Investors that buy bonds often do so because bonds

have a higher return potential than stocks.
provide a predictable income stream.
are higher risk than stocks.
are risk-free.








Question 8
Which of the following two stocks is least risky, assuming it is held in a diversified portfolio? Use the information below.


                                    See-Saw incorporate                                  SloMo Corporation
Beta                                        2.2                                                                   0.75
1-year return                         2%                                                                    12%
5-year return                        25%                                                                    8%

See-Saw Incorporated
There is insufficient information to determine the risk.
SloMo Corporation
They are equally risky.

Question 9
Large-cap companies have market capitalization greater than or equal to

$1 billion.
$5 billion.
$100 million.
$10 million.

Question 10
What is the primary reason investors are attracted to preferred stock?
steady dividend stream
low business risk
noncumulative dividends
callability

Question 11
What feature of preferred stock allows shareholders to change their preferred stock into common stock?

convertibility
portability
callability
par value

Question 12
Which of the following types of bonds has the lowest liquidity risk?
treasury bonds
corporate bonds
municipal bonds
All the options have equal liquidity risk

Question 13
Which statement is false regarding closed-end funds?

Closed-end funds always trade at their net asset value.
There are far fewer closed-end funds than there are open-end funds.
Closed-end funds have a fixed number of shares.
Closed-end funds may trade on organized exchanges or in the over-the-counter market.

Question 14
A mutual fund that does not charge either a front-end or back-end load:

is a no-load fund.
is a unit fund.
does not charge an annual management fee either.
always has a higher return than a load fund.


Question 15
Which fund classification would a focus on only stocks of Chinese companies match?
Growth fund
Income fund
Balanced fund
International fund

Question 16
A closed-end fund is an investment company that

sells a variable number of shares based on public demand and buys them back on demand.
issues a fixed number of shares that are bought back by the company.
sells a variable number of shares that are traded in the secondary market.
issues a fixed number of shares that trade on a stock exchange or in the over-the-counter market.

Question 17
Which fund classification would a focus on capital appreciation match?

Growth fund
Income fund
Balanced fund
Global fund

Question 18
A(n) ________ contract is a contract in which you promise to buy or sell the underlying asset at a point in the future for a price determined today.

futures
forward
treasury
annuities


Question 19
The net asset value of a mutual fund that is worth $100 million, has liabilities of $5 million, and has 5 million shares is

$100 million
$95 million
$19 per share
$1 per share

Question 20
When planning for mutual fund costs, a common concept is the fund's ________ ratio, measured by the expenses per dollar of assets under management.

expense
fund
liquidity
dollar

Question 21
Which statement is false regarding exchange-traded funds?

Many exchange-traded funds are designed to be index funds.
Exchange-traded funds are examples of closed-end funds.
Share prices on an exchange-traded fund are determined by market forces.
All of the choices are true.

Question 22
Pug Marbury is looking at some indirect investment choices and notices one of them acts a lot like a mutual fund. Which of the following choices has he likely come across?

real estate investment trust
mortgage-backed security
limited partnership
commercial property

Question 23
Which is a characteristic of an exchange-traded fund (ETF)?

Shares are traded in the secondary market like shares in a closed-end fund.
Shares trade at the net asset value like shares in an open-end fund.
The number of shares outstanding is fixed as in a closed-end fund.
The shares are invested only in common stock of publicly traded corporations.

Question 24
Most open-end mutual funds charge a front-end load, which is

a sales charge or commission paid by investors each year that they own shares in the fund.
a brokerage fee that is paid to a broker for selling mutual funds in the secondary market for an investor.
the annual expenses on the fund divided by the net asset value.
a sales charge or commission paid by an investor when purchasing shares in a mutual fund.

Question 25
Fees paid by mutual fund shareholders include all the following EXCEPT a(n)

10% fee on excess returns.
one-time sales charge assessed at the time of purchase.
annual account maintenance fee.
exchange fee when the investor transfers money from one fund to another.

    

FP100T Week 4 Few questions

Question 4

Which of the following is the recommended guideline for the maximum amount to borrow in order to keep your monthly payments manageable?

Average salary for your chosen job
No more than household income
Average starting salary for your chosen job
Average starting salary for your chosen job times 1.25


Question 5
If you opt for a joint and survivor annuity, you are entitled to receive a series of equal payments to

you and your spouse until the first one dies.
you and your spouse until the last one dies.
you and your spouse during the life of both, with the remainder going to your children.
you, your spouse, and your children until the last person dies.


Question 7
What happens when the total payroll taxes collected for Social Security exceed the total being paid out in benefits to current retirees?

The SSA invests the excess in special-issue government bonds.
The SSA distributes the excess to the lowest-earning beneficiaries.
The SSA returns the excess as tax refunds.
The SSA uses the funds to invest in austerity programs.


Question 8
The term used by economists to describe the tendency of people to overemphasize short-term goals and outcomes is called

myopia.
short ethos.
average focus.
avoidance.

Question 10
As with other types of financial planning, the last step in retirement and education planning is to


monitor your progress and revise your plan as needed.
implement your plan.
decide on the best plan.
identify your needs.


Question 11
If Jack Miller were to underestimate the effects of inflation on his retirement income, his standard of living in retirement could consistently__________ as he gets older.

increase
decline
stay the same
improve

Question 12
In comparing qualified expenses across the three government programs to help fund education expenses, which of the following should you choose if you needed to pay education costs for K–12, in addition to higher education costs?

Coverdell Education Savings Account
Section 529 Prepaid Tuition plan
Section 529 Savings plan
All of the choices are correct.


Question 14

To be "fully insured" under the Social Security program,

you must have earned at least a specified minimum dollar amount for 40 three-month periods.
you must be at least age 60.
you must be a naturalized citizen.
all of the above.


Question 15
Dollar cost averaging will result in

a lower average purchase price than the average price over the long term.
a higher average purchase price than the average price over the long term.
a smaller return than a buy-and-hold strategy if prices are rising.
a greater return than a buy-and-hold strategy if prices are rising.

Question 16
Which of the following is NOT one of the risks equity investors normally face?

Inflation risk
Reinvestment risk
Maturity risk
Market risk

Question 17
Debt investments pay lower returns compared to equities in general. This is because debt investments are ________ equities.

less risky than
more risky than
as risky as
a subgroup of

Question 18
An investor interested in a short-term horizon will avoid purchasing real estate, art, and collectibles due to ________ risk.

liquidity
interest rate
maturity
default

Question 19
A 10-year government bond is likely to offer a higher yield than a 5-year government security because of

interest rate risk.
default risk.
the real risk-free rate.
taxation.

Question 21
An investment of $1 each in two different securities led to a value of $10 (Security A) and $20 (Security B), respectively, after 15 years. When comparing the rate of return earned by the two securities, it can be said that

Security B earned a higher average annual rate of return.
Security A earned a higher average annual rate of return.
both securities earned the same average annual rate of return.
it is impossible to calculate the securities rates of return based on this information.


Question 22
Which asset class is least risky?

Corporate bonds
Treasury bonds
Derivative securities
Large company stocks


Question 23
Which of the following is not one of the steps in the investment planning process?

Select appropriate investments.
Estimate how much can apply to your investment program.
Sign up for your employer's FSA (flexible spending account).
Monitor your investment planning.

Question 24
Which of the following would be considered a commodity?

raw materials
an option
real estate
a government bond

Question 25
Your accountant has just told you that one of your investments had a capital gain over the year. This would mean that

the value of the investment appreciated.
the investment paid a large dividend.
the investment made a large interest payment.
you received a tax refund related to the investment.

   

    

FP100T Week 3 Few Questions

Question 6
When the interest on a loan is calculated every period on the outstanding balance, this is known as the _____________ method.
interest-only
discount interest
add-on interest
simple interest

Question 7
Which of the following statements concerning the add-on interest method is true?

The lender subtracts the interest due from the principal before the borrower receives the loan proceeds.
Interest is added to the amount borrowed before the payments are calculated.
It usually results in a higher APR than the discount interest method.
It results in a lower APR than the simple interest method.

Question 9
An interest rate on credit cards that is below the market rate and is offered to new customers is known as a(n) __________ rate.
Teaser
temporary
cash advance
balance transfer

Question 10
A secured loan is a loan that has a(n)
pledge of collateral
cosigner
minimum monthly payment
acceleration clause

Question 11
The method most commonly used by financial institutions to determine finance charges on consumer loans is the
add-on interest method
discount interest method
simple interest method
compound interest method

Question 14
A closed-end lease is a lease in which the
terms of the lease contract are nonnegotiable by the lessee.
terms of the lease contract are nonnegotiable by the lessor or lessee.
lessee takes the risk that the resale value of the car at the end of the term will be less than what was originally assumed.
lessor takes the risk that the resale value of the car at the end of the term will be less than what was originally estimated.

Question 15
Mortgage insurance premiums are usually imposed if the loan-to-value ratio is more than
80 percent.
90 percent.
50 percent.
75 percent.

Question 16
Which of the following is an example of a fixed cost of automobile ownership?
gasoline
maintenance
loan or lease payment
registration

Question 17
Janelle is debating whether to buy or lease her favorite car. Under a closed-end lease, Janelle will

be able to walk away from her lease no matter the condition of the car.
have to purchase the car at lease-end.
be required to compensate the lessor for fluctuations in the resale value of the car at lease end.
not be required to compensate the lessor for fluctuations in the resale value at lease end.

Question 18
Borrowers sometimes pay points to their mortgage lender in order to
reduce the interest rate.
reduce the term of the loan.
reduce the principal balance of the loan.
cover their closing costs.

Question 19
A home in a good location will generally
be easier to sell.
appreciate faster in value.
have all of these benefits.
sell for more.

Question 22
When considering spending on housing needs, if a person is heavily immersed in credit card debt,
the individual should continue to borrow against credit cards to maintain a roof over their head.
the person should first satisfy housing needs and then focus on paying down credit card debt.
it would be a good idea to save money by cutting on housing expenditures and paying down credit card debt first.
credit card debt and housing needs are separate and should not be interlinked.

Question 24
If you must pay a fee at the end of the lease term if you choose not to purchase the vehicle, this is known as a:
disposition fee.
capitalized cost reduction.
purchase fee.
back-end fee.

Question 25
Which of the following is a mortgage loan that has a fixed rate, a fixed term, and fixed payments?
conventional mortgage
reverse annuity mortgage
growing equity mortgage
ARM

   

FP100T Week 2 Exam few Questions

Question 5
Bank A offers an account with a nominal yield of 2 percent, and it compounds interest monthly. Bank B offers an account with nominal yield of 2 percent, and it compounds interest daily. Which one has the higher APY?

Bank A has the higher APY.

Bank B has the higher APY.

They both have the same APY.

This cannot be solved from the given information.

Question 8
One approach to forecasting variable expenses is to

keep them constant.

assign probabilities to different outcomes.

use a wide range of estimates.

increase them by the expected inflation rate.

Question 9
The steps in the budgeting process are forecasting cash flows, __________, monitoring, and reevaluating over time.




selecting

negotiating

implementing

adjusting


The "Four Ps" to consider in choosing a financial institution include product, price, people, and
precision.

productivity.

profit.

place.


Question 12
If your projected net cash flow is negative, which of the following should you do first?
Make sure you have a large enough credit line to make up the difference.

Take steps to reduce your discretionary spending or increase your cash inflows.

Save more so that you can build up your emergency fund.

Apply for another credit card with a high credit limit.

Question 14
Which of the following types of taxes paid is not an allowable itemized deduction?
use taxes

personal property taxes

property taxes on your primary residence

state income taxes


Question 15
Reimbursement accounts for qualified medical and child care expenses are known as
flexible spending accounts.

deferred compensation plans.

option plans.

cafeteria plans.

Question 16
A tax that imposes higher rates on taxpayers with higher incomes is
usury.

illegal.

regressive.

progressive.

Question 17
Which of the following tax forms is known as the long form?
1040

1040A

1040X

1040B

Question 18
Matthew is 16 years old and can be claimed as a dependent by his parents. He received $1,500 in dividends and $650 in interest and earned $4,800 from odd jobs during the year. Will Matthew need to file a separate tax return? Why?

No. His unearned income and gross income do not exceed the maximum limits.

Yes. His earned income exceeds the maximum limit.

No. His gross income does not exceed the maximum limit.

Yes. His unearned income exceeds the maximum limit.

Question 19
What is the FICA payroll tax used to pay for?




Medicare

both Social Security and Medicare

Social Security

neither Social Security nor Medicare


Question 20
When your employer takes money out of your income and sends it to the government it is called

a tax credit.

payroll withholding.

a regressive tax.

an itemized deduction.



Married couples filing jointly can claim an exemption of $4,000 per person and they are allowed to take a standard deduction of $12,600. Greg and Jamie are married and both work. However, Greg was laid off near the beginning of the year and started school in summer. Their joint earned income was $22,250 before retirement contribution, and Jamie contributed $3,400 to her eligible IRA. Based on Greg and Jamie's situation, which of the following is true?
Greg and Jamie will pay federal income tax and payroll taxes.

Greg and Jamie will only pay payroll taxes.

Greg and Jamie will not pay any form of tax.

Greg and Jamie will only pay federal income tax.

Question 23
Which of the following is NOT deductible from income for federal income taxes?
traditional IRA contribution

employer retirement plan contribution

Roth IRA contribution

medical flexible spending account contribution
Question 25
His accountant has informed Ray that he qualifies for the American Opportunity Tax Credit because he is a full-time student at the local university. Assuming Ray qualifies for a $2,500 tax credit, this means the credit will

increase his itemized deductions by $2,500.

guarantee him a tax refund of $2,500.

reduce his taxes owed by $2,500.

reduce his taxable income by $2,500.

   

FP100T Week 5 WileyPlus Weekly Exam SCORE 100 PERCENT

Question 1
Aeryn Soon is a potential investor of Hippy Dippy Inc.'s preferred stock, which is currently selling for $475 per share. Hippy Dippy pays an annual dividend of $40, and Aeryn's required return is 8 percent. Should she purchase this preferred stock or NOT? Why?
Yes, because the value of the preferred stock is $500.
No, because the value of the preferred stock is $250.
Yes, because the value of the preferred stock is $250.
No, because the value of the preferred stock is $500.

Question 2
Corporate bonds often have a ________, a contractual term that allows the firm to repay the bond before the maturity date.
bearer provision
maturity date provision
convertible provision
call provision

Question 3
Which of the following statements regarding bonds and inflation risk is true?
Bond investors will require higher yields on bonds if inflation rises.
Long-term bonds have less inflation risk than short-term bonds.
Rising inflation will generally cause bond prices to also rise.
Bonds are less influenced by inflation risk than are common stocks.

Question 4
A written agreement that gives your common stock voting rights to someone else is known as a
preemptive right.
voting assignment.
proxy.
forfeit agreement.
Question 5
A corporate bond has a 9.4 percent coupon rate. The bond has a $1,000 face value and is currently selling at $900. The annual coupon payment on this bond is
$94.00.
$84.60.
$108.70.
$97.83.

Question 6
What feature of preferred stock allows shareholders to change their preferred stock into common stock?
convertibility
portability
callability
par value


Question 7
Dell is an American computer company. The founder, Michael Dell, and global technology investment firm, Silver Lake Partners, own all of the shares of Dell. It is not possible to buy shares of Dell stock on the secondary market because Dell is a
public corporation.
sole proprietorship.
partnership.
private corporation.

Question 8
If you purchase shares of preferred stock and interest rates on similar risk securities later go up, what will happen to the market value of your stock?

It will increase.
It will decrease.
It will stay the same.
There is insufficient information to determine what will happen

Question 9
When brokers engage in excessive trading of customers accounts in order to increase their commissions, this is called
churning.
discretionary trading.
whipsawing.
insider trading.

Question 10
When a stock split occurs,
the market usually views the split as bad news about future prospects for the company.
the price of new shares is lower than the old price.
the company expects the value of shares to go down in the future.
owners of stock end up with a lower proportionate number of shares.

Question 11
Investors that buy bonds often do so because bonds
are higher risk than stocks.
have a higher return potential than stocks.
provide a predictable income stream.
are risk-free.

Question 12

It is illegal for insiders to
trade on company information not available to the public.
trade on any information about the company in which they are insiders.
own stock in the company in which they are insiders.
sell stock in the company as long as they are insiders.

Question 13
When planning for mutual fund costs, a common concept is the fund's ________ ratio, measured by the expenses per dollar of assets under management.
expense
fund
liquidity
dollar

Question 14
Which is the first step out of the four steps in the mutual fund selection process?
Identify your investment objective.
Decide which fund classifications are appropriate for your objective.
Compare funds based on risk and return, costs, and services.
Buy shares in the selected funds.

Question 15
The basic equation for real estate return on investment is the increase in value plus the net rental income, minus the interest expense, all of which is divided by which financial component?
beginning investment
capital appreciation
ending outlay
market price

Question 16
Sam Drexler is thinking of directly investing in real estate. Which is NOT a direct investment choice for Sam?
mortgage-backed securities
rental property
vacant lots
commercial property

Question 17
Which statement regard REITs is false?
Unlike UITs, REITs have a limited lifespan.
Equity REITs make direct investments in rental and commercial property.
REITs are a type of closed-end investment company.
REITs must distribute 90 percent of taxable income to shareholders each year.

Question 18
Pug Marbury is looking at some indirect investment choices and notices one of them acts a lot like a mutual fund. Which of the following choices has he likely come across?
real estate investment trust
mortgage-backed security
limited partnership
commercial property

Question 19
Which benefit of investing in mutual funds pertains to the ability to sell your shares at market price due to a large demand for mutual fund assets?
Liquidity
Withdrawal option
Dividend reinvestment
Diversification
Question 20
Which statement is false regarding exchange-traded funds?
Many exchange-traded funds are designed to be index funds.
Exchange-traded funds are examples of closed-end funds.
Share prices on an exchange-traded fund are determined by market forces.
All of the choices are true.

Question 21
Most open-end mutual funds charge a front-end load, which is
a sales charge or commission paid by investors each year that they own shares in the fund.
a brokerage fee that is paid to a broker for selling mutual funds in the secondary market for an investor.
the annual expenses on the fund divided by the net asset value.
a sales charge or commission paid by an investor when purchasing shares in a mutual fund.

Question 22
Assets minus liabilities, per share, is known as the
net asset value.
open-end value.
unit investment.
return index.

Question 23
A(n) ________ contract is a contract in which you promise to buy or sell the underlying asset at a point in the future for a price determined today.

futures
forward
treasury
annuities

Question 24
A mutual fund that invests in a mix of equity and fixed income securities is a(n):
balanced or hybrid fund.
value fund.
growth fund.
income fund.

Question 25
The net asset value of a mutual fund that is worth $100 million, has liabilities of $5 million, and has 5 million shares is
$100 million
$95 million
$19 per share
$1 per share

  

 

FP100T Week 4 WileyPLUS Week 4 Weekly Exam SCORE 100 PERCENT

Question 1
Which of the following is NOT an income-driven repayment plan for federal student loans?
Income-based repayment
Pay as you Earn plan
Income deferment plan
Income-contingent plan

Question 2
Which of the following is an option to postpone student loan payments?
Student loan forgiveness
Payment reduction
Deferment
Loan suspension

Question 3
What type of loan starts accruing interest at the time of disbursement?
Subsidized
Pell
Unsubsidized
All federal loans

Question 4
Which of the following is the recommended guideline for the maximum amount to borrow in order to keep your monthly payments manageable?

Average salary for your chosen job
No more than household income
Average starting salary for your chosen job
Average starting salary for your chosen job times 1.25

Question 5
The benefit of a Section 529 plan is
a tax credit.
a tax deduction.
a tax savings on investment earnings.
a reimbursement of tuition costs.

Question 6
Assume that you have estimated your retirement wealth needed to be $1,000,000, based on a 7 percent investment return, 4 percent inflation during retirement, and 20 years of retirement. If inflation turns out to average less than 4 percent per year during retirement, what will be the effect on your retirement wealth needed?
You will need less than estimated.
You will need more than estimated.
You will need the same amount as estimated.
There is not enough information to answer the question.

Question 7
Delaying Social Security benefits is a good strategy for maximizing retirement income. By choosing not to begin receiving benefits at the normal retirement age of 67, a participant's benefits will increase by ____ percent for each year of delay up to age 70.
1
8
10
15

Question 8

The Lifetime Learning tax credit is a credit of

30 percent of the first $5,000 of college expenses up to a maximum of $1,500 for every eligible dependent who has incurred these expenses during the year.
20 percent of the first $5,000 of college expenses up to a maximum of $1,000 for every eligible dependent who has incurred these expenses during the first two years of college.
30 percent of the first $5,000 of college expenses up to a maximum of $1,500 for every eligible dependent who has incurred these expenses during the first two years of college.
20 percent of the first $10,000 of tuition and fees up to a maximum of $2,000 for every eligible dependent who has incurred these expenses during the year.

Question 9
Jeff, a 56-year-old professor, is subject to a 28% tax rate. He has had a family emergency and must withdraw $5,000 from his IRA to fund it. How much money will he owe the government for this withdrawal?
$140
$1,400
$500
$1,900

Question 10
Travis has purchased an annuity to help offset the cost of retirement and reduce the likelihood that he will outlive his other benefits. He is guaranteed $2,000 per month, which means he has invested in a ________ annuity.
fixed
variable
deferred
joint

Question 11
In order to estimate your retirement income shortfall in the first year of retirement, you need to subtract your expected income from employer DB retirement plans from your before-tax income need in your first year of retirement, and then ________ expected Social Security benefits.
subtract
add
multiply by
divide by

Question 12
Who controls the account for Section 529 plans?
the contributor
the parent or guardian
the student
the government

Question 13
When developing your retirement and education plan, after you have estimated the additional savings needed to achieve your funding goals, what should you do next?
Find tax-efficient strategies for savings.
Implement the funding and savings plan.
Evaluate your progress and revise if needed.
Find any discounts offered by different plans and agencies.

Question 14
To be "fully insured" under the Social Security program,
you must have earned at least a specified minimum dollar amount for 40 three-month periods.
you must be at least age 60.
you must be a naturalized citizen.
all of the above.

Question 15
Which of the following is NOT one of the risks equity investors normally face?
Inflation risk
Reinvestment risk
Maturity risk
Market risk

Question 16
During the period 2008–2010, when the U.S. stock market went through a severe downturn, many people lost their jobs and/or their home values. The "Great Recession," as it was described by economists, led to an increase in risk aversion of most people due to
the aging of the population.
lowered consumer confidence.
the increase in wealth of average Americans.
the increase of female investors.

Question 17
Portfolio diversification in the real world can be employed to
reduce risk of a portfolio up to a point.
eliminate the risk of a portfolio completely.
primarily increase the return of a portfolio.
primarily reduce the return of a portfolio.

Question 18
Which of the following statements is INCORRECT?
Stocks provide a steady rate of return year after year with minimal fluctuations.
U.S. government-issued securities are some of the safest securities available.
Inflation risk is considered by the market when setting securities prices.
Investors with a high degree of risk aversion will generally invest greater amounts in bonds.

Question 19
An investor interested in a short-term horizon will avoid purchasing real estate, art, and collectibles due to ________ risk.
liquidity
interest rate
maturity
default

Question 20
Which of the following is the most appropriate investment for emergency funds?
Long-term corporate bonds
Stocks
A mix of stocks and long-term bonds
Near-term safer securities with a predominance of money market funds

Question 21
The biggest problem with timing strategies is
it is difficult to correctly predict highs and lows in the market.
transaction costs are higher than with other active investing strategies.
small investors are usually not able to get in and get out during market highs and lows as are institutional investors.
taxes will be higher on your investment returns.

Question 22
Which of the following statements regarding default risk is true?
In a bankruptcy proceeding, the value of an equity investment is likely to be zero.
This risk is greater for short-term securities than for long-term securities.
In a bankruptcy proceeding, the value of a debt investment is likely to be zero.
This risk is greater for long-term securities than for short-term securities.

Question 23
A person is said to be risk averse if he or she
prefers a certain amount of return over an opportunity to receive an equal but uncertain amount of return.
will give up a certain amount of return in exchange for an opportunity to receive an equal amount of return representing expected or average value of an uncertain event.
will give up a certain amount of return in exchange for an opportunity to receive an equal or lower amount of return representing expected or average value of an uncertain event.
will give up a certain amount of return in exchange for an opportunity to receive an equal or greater amount of return representing expected or average value of an uncertain event.

Question 24
Which of the following is not a passive investment strategy?
Timing
Buy and hold
Indexing
Laddering

Question 25
Goodroad Transportation Company has earned a profit of $25 million in the last concluded year. In order to reward its shareholders, it intends to pay a total dividend of $8 million. Goodroad will pay the dividend from
its profits.
the original capital investment of its shareholders.
tax refunds it gets from the taxing authority.
the new sale of equity shares to the public.

    

FP100T Week 3 Weekly Exam

Question 1
What is the function of the Consumer Financial Protection Bureau?

It insures the money consumers have placed in large banks.
It protects consumers from unfair or illegal lending.
It sets the maximum interest rates that can be charged on credit cards.
It establishes standard contracts for home equity loans.

Question 2
The legal document that specifies the terms and conditions of a consumer loan is the

judgement
lien
promissory note
trust agreement

Question 3
When real property is used as collateral to secure a loan, the lender records a __________ against the property.

mortgage
deed
lien
judgement

Question 4
Which of the following is not one of the situations that can defer student loan payments?

Peace Corps service
Postsecondary study
Change in citizenship
Economic hardship

Question 5
Payday lenders are controversial because they

are in competition with traditional lenders.
charge very high rates of interest.
allow people cash their paychecks even when they do not have a bank account.
make it easier for undocumented workers to stay in the job market.

Question 6
When you know that you cannot meet your debt obligations, you should

contact your creditors directly to explain the situation.
use alternative lenders such as payday lenders.
declare bankruptcy as soon as possible.
not contact your creditors because it will adversely affect your credit report.

Question 7
Negative credit information, with the exception of bankruptcies, must be removed from a credit report after __________ years.

10
5
3
7

Question 8
For borrowers who carry a balance on their credit cards, which of the following methods essentially gives the consumer free credit from the date of purchase until the beginning of the next billing cycle?

Two-cycle average daily period
Previous balance method
Average daily balance method without a grace period
Average daily balance method with a grace period

Question 9
In assessing a person's creditworthiness using the Five Cs of Credit, which of the following is applicable in the category of "capacity"?

the amount of other debt the applicant already owes
the credit score of the person applying for credit
the income of the person applying for credit
the value of the asset that will secure the loan

Question 10
Which of the following is the formula for calculating the APR on a credit card?

(Average annual finance charges + Annual fee)/Average loan balance
(Total annual finance charges + Annual fee)/Average loan balance
Average annual finance charges/Average loan balance
(Total annual finance charges – Annual fee)/Average loan balance

Question 11
The grace period is the period of time before

a penalty will be assessed for late payment.
the lender will increase the interest rate on the credit card.
interest begins to accrue on new transactions.
the balance is due in full.
(B or C is correct)

Question 12
The method most commonly used by financial institutions to determine finance charges on consumer loans is the

discount interest method
add-on interest method
compound interest method
simple interest method

Question 13
An interest rate on credit cards that is below the market rate and is offered to new customers is known as a(n) __________ rate.

cash advance
teaser
temporary
balance transfer

Question 14
Janelle is debating whether to buy or lease her favorite car. Under a closed-end lease, Janelle will

be required to compensate the lessor for fluctuations in the resale value of the car at lease end.
not be required to compensate the lessor for fluctuations in the resale value at lease end.
be able to walk away from her lease no matter the condition of the car.
have to purchase the car at lease-end.

Question 15
Which of the following statements is true of adjustable-rate mortgages?

There is no limit as the amount of payment change on an ARM.
The interest rate changes on ARMs are limited per year and per lifetime.
They cannot be converted to fixed-rate loans.
They generally carry higher initial interest rates than conventional mortgages.
(B or C is correct)

Question 16
Among other factors, the price a buyer is willing to pay for a house is a function of

the family size of the buyer and the distance to work.
the marital status of the buyer and years of employment.
mortgage interest rates and the condition of real estate market.
the credit rating of the buyer and the family size.

Question 17
When considering spending on housing needs, if a person is heavily immersed in credit card debt,

credit card debt and housing needs are separate and should not be interlinked.
it would be a good idea to save money by cutting on housing expenditures and paying down credit card debt first.
the person should first satisfy housing needs and then focus on paying down credit card debt.
the individual should continue to borrow against credit cards to maintain a roof over their head.

Question 18
The dealer's invoice price is the price that the dealer

uses as the beginning negotiating price with the buyer.
puts on a car after purchasing it from the manufacturer.
uses when selling the car to a buyer.
pays to purchase a new vehicle from the manufacturer.

Question 19
Compared with a 15-year mortgage at the same rate of interest, a 30-year mortgage will

require payment of a mortgage insurance premium.
result in less interest being paid over the life of the loan.
result in more principal being repaid over the life of the loan.
require a lower monthly payment.

Question 20
If a borrower wants to lower her monthly mortgage payments, she should

negotiate a lower interest rate.
extend the term of the loan.
make a larger down payment.
do all of these.

Question 21
If all else is equal, which of the following is LEAST likely to increase the price of the house you can afford to buy?

increasing mortgage rates
longer mortgage term
improvement in your credit rating
increase in your gross monthly salary

Question 22
Not having a long-term, fixed housing payment ________ a home.

is both an advantage and disadvantage of renting
are advantages of renting
is a disadvantage of owning
are disadvantages of renting

Question 23
In a home purchase, what are discount points?

Interest paid up front by the buyer to the lender in return for a reduced annual interest rate.
Interest paid up front to the lender in return for a reduced monthly mortgage payment.
A reduction in the annual interest rate of the mortgage loan because the buyer made a higher-than-required down payment.
A reduction in the closing costs due to the fact the buyer put up a large amount of earnest money.

Question 24
Generally, a person should consider leasing a car under a closed-end lease contract rather than purchase a new car if

she wants to lower her monthly payments.
she does not want to take the risk of residual value fluctuation.
she does not drive a lot of miles annually.
all of these are true.

Question 25
A lessee is a person who

purchases property from another person, but sells it back after a period of time.
sells property to another person with the intention of purchasing it back after a period of time.
pays money for the privilege of using someone else's property for a period of time.
owns property and charges someone money to use that property for a period of time.

           

FP100T Week 2 WileyPlus Exam SCORE 100 PERCENT

Question 1
A budget variance occurs when your actual expenses are ______ than your budgeted expenses.
less
more
different
all of the above

Question 2
Which of the following pays interest that is exempt from state and local taxation?

certificate of deposit
NOW account
series EE bond
inflation.

Question 3
If you write a check or use your debit card when there isn't enough money in your account to cover the payment, this is known as

being unbanked.
skimming.
a stop payment.
an overdraft.

Question 4
Sophie wrote a check to a contractor who did not complete the job. She would like to make sure the contractor is unable to cash her check. She should go to her financial institution and request a(n)

overdraft protection.
stop payment.
wire transfer.
police report.

Question 5
A money market mutual fund is a mutual fund that invests in

stocks of the 500 largest companies in the United States.
investment quality corporate bonds.
short-term, low risk financial assets such as short-term government bonds.
long-term certificates of deposit.

Question 6
You have invested $1,000 in an account that promises APY of 3 percent per year. Assuming you leave the original investment and all earned interest in the account, and ignoring taxes, how long will it take to double your money?

72 years
24 years
12 years
4.16 years

Question 7
A savings account that pays a stated rate of interest if you agree to leave your money on deposit for a certain period of time is known as a

mutual fund.
series EE fund.
certificate of deposit.
money market account.
Question 8
For an account that compounds interest more often than once per year, the annual percentage yield will be

greater than the stated nominal yield.
less than the stated nominal yield.
equal to the stated nominal yield.
either greater than or less than the stated nominal yield, depending on the current interest rate environment

Question 9
Which of the following types of accounts is not insured for $250,000 by the Federal Deposit Insurance Corporation (FDIC)?

savings account at a commercial bank
money market mutual fund offered by an insurance company
checking account at an online bank
savings account at a savings and loan association

Question 10
Credit unions are a unique type of depository institution because credit unions

are primarily mortgage lenders.
tend to charge higher fees than commercial banks.
are nonprofit.
are insured by FDIC.

Question 11
Simone spent an average of $500 each month on groceries last year for herself and her family. She is now forecasting the family budget for next year. She read that an inflation rate of 5% is expected. How much should Simone budget for the monthly food expense next year?

$500
$525
$750
$475

Question 12
A ________ is an investment company that sells shares to investors and then invests the pool of funds in stocks, bonds, or other assets.

mutual fund
life insurance company
brokerage firm
credit union

Question 13
Which of the following tax credits best applies to a low-income person contributing to an IRA?

lifetime learning credit
retirement savings contribution credit
child tax credit
American Opportunity credit

Question 14
To calculate taxable income, which of the following must be subtracted from adjusted gross income?

adjustments to income
tax credits
FICA payroll tax
personal exemptions
Question 15
___________ taxes are used to finance Social Security and Medicare.

FSSA
FICA
SIS
FDIC
Question 16
Which of the following tax credits best applies to a parent of an undergraduate freshman?

retirement savings contribution credit
American Opportunity credit
lifetime learning credit
child tax credit

Question 17
Jim and Judy file taxes jointly as a married couple. They have a combined adjusted gross income of $97,651. They can claim two exemptions of $4,000 each. Their Schedule A itemized expenses are as follows: Interest on home mortgage, $11,986; Property taxes on home, $3,762; Total medical expenses, $1,345; and Charitable contributions, $900. What is their taxable income?

$71,648
$73,903
$81,003
$73,003

Question 18
To which of the following does the marginal tax rate apply?
last dollar of income
next dollar of income
no dollars of income
first dollar of income

Question 19
Your average tax rate will always be _______ your marginal rate.

the difference between your taxable income and
more than
the same as
less than or equal to

Question 20
Which of the following must be included in total income on federal income tax returns?

child support received
tips and bonuses
worker's compensation benefits
insurance claim payments

Question 21
Which of the following is the formula for calculating the average tax rate?

taxes paid/taxable income
taxes paid/ adjusted gross income
taxable income/taxes paid
adjusted gross income/ taxes paid

Question 22
If you made a mistake on last year's tax return, you would file a

W4.
1040A.
1099.
1040X.
1040EZ

Question 23
The reduction in taxes owed as a result of a financial decision is known as the

average tax effect.
progressive tax effect.
opportunity cost
marginal tax effect.

Question 24
What is the FICA payroll tax used to pay for?
neither Social Security nor Medicare
Social Security
both Social Security and Medicare
Medicare

Question 25
Which of the following is an expense that is subtracted from total income to arrive at adjusted gross income?

child care tax credit
lottery winnings
individual retirement account contributions up to the legal limit
long-term capital gains

     

FP100T WileyPLUS Week 1 Weekly Exam SCORE 100 PERCENT

Question 1
In a __________ arrangement, the planner is compensated for every financial product sold but does not receive any payment for developing a personal financial plan.

fee plus commission
fee offset by commission
commission only
fee only

Question 2
Which of the following in NOT one of the recommended SMART guidelines for personal financial goals?

Specific
Realistic
Attainable
Manageable

Question 3
A comprehensive financial plan includes three steps: establishing a firm foundation, securing basic needs, and

building and protecting wealth.
setting long-term goals.
monitoring progress.
setting short-term goals.

Question 4
You are considering adding a wood shop to your home. You enjoy woodworking and could make items for sale. In considering this addition, you only look at the extra cost of the shop and the potential benefits of having the shop. This is an example of

opportunity cost decision-making.
marginal reasoning.
reasonable assumptions.
sensitivity analysis.
Question 5
The Federal Reserve often _______________ the _______________ rate to stimulate the economy.

raises; fed funds
raises; prime
lowers; fed funds
lowers; prime

Question 6
Which of the following has passed a comprehensive examination covering all the topic areas considered necessary in the practice of financial planning and has at least three years of work experience in the field?

Accredited Financial Planner (AFC)
Certified Financial Planner (CFP®)
Chartered Financial Consultant (ChFC)
Certified Public Accountant (CPA)

Question 7
When inflation, as measured by the change in the consumer price index (CPI), is high,

the value of the dollar is high.
you will earn less on your investments.
you can buy goods and services cheaper.
the prices of goods and services are likely to increase.

Question 8
You have estimated that if your investments earn 10 percent per year, you can retire at age 65. If you re-estimate your retirement date assuming a lower investment return, you are using

marginal reasoning.
future value.
opportunity cost.
sensitivity analysis

Question 9
Your salary has increased 50 percent in five years. What is the annual percentage increase? Round your answer to one decimal place.

11.2%
8.7%
8.5%
10%
Question 10
You decide to take a part-time job to help with your college expenses. The hours available for study are thus reduced. The reduction in study hours would be your:

direct cost.
variable cost.
fixed cost.
opportunity cost.

Question 11
Which of the following describes a Certified Financial Planner (CFP®)?

A CFP® majored in financial planning in college.
A CFP® has worked in the banking industry.
A CFP® has at least five years of experience.
A CFP® has passed a rigorous exam.

Question 12
In deciding whether to go to graduate school, evaluating the benefit based on the potential change in your earnings is an example of

opportunity cost.
sensitivity analysis.
future value.
marginal reasoning

Question 13
For a person in their 20s the goal to save for retirement is considered a(n)

long-term goal.
unrealistic goal.
intermediate-term goal.
short-term goal.

Question 14
You want to know how much $10,000 invested today is going to be worth 10 years from now. Which type of time value of money calculation should be used to solve this problem?

present value of a lump sum
future value of a lump sum
present value of an annuity
future value of an annuity

Question 15
You are considering two amortized loans with the same interest rate and the same initial amount borrowed. If the number of months to repay Loan X is greater than the number of months to repay Loan Y, the monthly payment on Loan X will be _____ than the payment on Loan Y.

higher
lower

Question 16
In order to determine how much you would need to save yearly in order to finance your child's college education in 10 years, you would use

future value of an annuity.
present value.
present value of an annuity.
future value.

Question 17
Which of the following best defines market value?

The price that was paid for the asset.
The price that an asset could be sold for today.
The purchase price of an asset minus depreciation.
The purchase price of an asset plus depreciation.

Question 18
An annuity due is a type of annuity in which each payment is made or received at

the beginning of a period.
the ending of a period.
any time.
predetermined intervals within a period.

Question 19
A financial statement used to evaluate the relationship between your income and expenditures is known as a

personal cash flow statement.
personal balance sheet.
cost-benefit statement.
liquidity statement.

Question 20
Fixed expenses are

the same dollar amount in each payment period.
more common than variable expenses.
different dollar amounts each month.
the same percentage of a person's income each month.

Question 21
You can afford to make monthly payments of a certain amount for three years, and you want to know how much you can borrow based on this payment amount. Which type of time value of money calculation should be used to solve this problem?

future value of a lump sum
present value of an annuity
present value of a lump sum
future value of an annuity

Question 22
Which financial ratio do lenders use to evaluate whether a loan applicant makes enough money to pay the monthly mortgage payments?

mortgage debt service ratio
debt ratio
debt payment ratio
savings ratio

Question 23
Which of the following is true regarding future value?

the longer the term, the lower the future value
the lower the interest rate, the lower the future value
the higher the interest rate, the lower the future value
the shorter the term, the higher the future value

Question 24
When recording inflows and outflows of cash for the cash flow statement, it is important

to track inflows more than outflows.
to record assets at their market value.
to monitor your spending for at least two years to get an accurate picture.
not to alter your normal spending behavior.

Question 25
You plan to invest $2,000 every year (end-of-year payments) from now until you retire in 30 years. If you can earn 7% annually on your invested funds, how much will you have when you retire?

$25,081
$204,146
$15,225
$188,922