FP 100T Week 1 WileyPLUS Weekly Exam

In this graded assignment, you are assessed on the content covered in this weeks’ readings, activities, and assignments. To help you prepare, it is recommended that you first complete this week’s Learning Path and Self-Test Learning Activities prior to completing this exam.

Complete the Week 1 Exam covering this week’s assigned readings:

“Ch. 1: The Financial Planning Process”

“Ch. 2: Financial Planning Tools: Personal Financial Statements and the Time Value of Money”

Note: Work submitted in WileyPLUS does not count toward attendance. Be sure to post at least two times each week in the online classroom to avoid being auto-dropped from the course.

Question 1

Your answer is correct.

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

Specific

Realistic

Attainable

Manageable

Attainable

Manageable

Question 2

Your answer is correct.

Which of the following describes a financial advisor who is paid based on a percentage of products sold or purchased by clients?

Fee-based

Commission-only

Fee plus commission

Fee-only

Question 3

Your answer is correct.

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

Your answer is correct.

Which of the following would NOT be a major factor when choosing a personal financial planner?

education

affiliation

reputation

certification

Question 5

Your answer is correct.

The federal funds rate is the rate that

credit card issuers use as the teaser rate.

banks charge customers for short-term loans.

banks charge each other for short-term loans.

the Federal Reserve charges banks for short-term loans.

Question 6

Your answer is correct.

An expansion is a phase in the economic cycle that is characterized by

decreasing business investment and decreasing employment opportunities.

increasing business investment and decreasing employment opportunities.

increasing business investment and increasing employment opportunities.

decreasing business investment and increasing employment opportunities.

Question 7

Your answer is correct.

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

A CFP® has passed a rigorous exam.

A CFP® has worked in the banking industry.

A CFP® has at least five years of experience.

A CFP® majored in financial planning in college.

Question 8

Your answer is correct.

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

sensitivity analysis.

future value.

opportunity cost.

marginal reasoning.

Question 9

Your answer is correct.

The financial planning process includes five steps. Four of the steps are listed below:

Analyze your current financial status.

Implement your financial plan.

Monitor your progress and revise your plan as needed.

Organize your financial information and set short-term and long term goals.

What is the missing step?

Identify and evaluate alternative strategies for meeting your goals.

Understand the personal financial planning process.

Acquire the necessary decision-making skills and tools.

Build wealth and protection against emergencies.

Question 10

Your answer is correct.

In a fee-based arrangement, the planner is compensated with an annual fee that is usually

a set amount for all clients.

based on the number of financial products purchased.

waived for large investment portfolios.

based on the size of the client’s asset portfolio being managed.

Question 11

Your answer is correct.

Which of the following is NOT one of the steps in the personal financial planning process?

Purchase life insurance.

Implement a plan for achieving goals.

Identify and evaluating alternative strategies for achieving goals.

Develop short-term and long-term financial goals.

Question 12

Your answer is correct.

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 offset by commission

commission only

fee plus commission

fee only

Question 13

Your answer is correct.

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?

Certified Public Accountant (CPA)

Certified Financial Planner (CFP®)

Accredited Financial Planner (AFC)

Chartered Financial Consultant (ChFC)

Question 14

Your answer is correct.

The basic idea of the time value of money is that $1 to be received in the future is worth ______ $1 received today because of the value of the compound interest.

less than

more than

the same as

Question 15

Your answer is correct.

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

personal cash flow statement.

cost-benefit statement.

personal balance sheet.

liquidity statement.

Question 16

Your answer is correct.

Gross monthly income = $3,500

After-tax monthly income = $2,870

Total debt = $86,000

Total monthly debt payments = $402

Total assets = $113,000

Based on the information given above, what is the debt ratio?

3%

131%

47%

76%

Question 17

Your answer is correct.

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

future value of an annuity

present value of a lump sum

Question 18

Your answer is correct.

A personal cash flow statement

shows income and expenditures over a period of time.

uses the same information needed for the personal balance sheet.

shows income and expenditures at one specific point in time.

is necessary for calculating one’s net worth.

Question 19

Your answer is correct.

You estimate your monthly mortgage principal and interest will be $1,000, property taxes will be $160 per month, and homeowner’s insurance will be $50 per month. If your gross monthly income is $4,000 per month and your tax rate is 20 percent, what is your mortgage debt service ratio?

65.2%

60.5%

30.25%

37.8%

Question 20

Your answer is correct.

You expect to receive a sum of money 10 years from now, and you want to know how much it is worth today. Which time value of money calculation should be used to solve this problem?

future value of an annuity

present value of a lump sum

present value of an annuity

future value of a lump sum

Question 21

Your answer is correct.

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?

$15,225

$25,081

$188,922

$204,146

Question 22

Your answer is correct.

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.

future value of an annuity.

present value.

present value of an annuity.

Question 23

Your answer is correct.

Which of the following is true regarding future value?

the higher the interest rate, the lower the future value

the longer the term, the lower the future value

the shorter the term, the higher the future value

the lower the interest rate, the lower the future value

Question 24

Your answer is correct.

Your assets total $100,000. Your total debts are $80,000. Your net worth is

0.8.

$180,000.

$20,000.

1.2.

Question 25

Your answer is correct.

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

In this graded assignment, you are assessed on the content covered in this weeks’ readings, activities, and assignments. To help you prepare, it is recommended that you first complete this week’s Learning Path and Self-Test Learning Activities prior to completing this exam.

Complete the Week 1 Exam covering this week’s assigned readings:

“Ch. 1: The Financial Planning Process”

“Ch. 2: Financial Planning Tools: Personal Financial Statements and the Time Value of Money”

Note: Work submitted in WileyPLUS does not count toward attendance. Be sure to post at least two times each week in the online classroom to avoid being auto-dropped from the course.

Question 1

Your answer is correct.

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

Specific

Realistic

Attainable

Manageable

Attainable

Manageable

Question 2

Your answer is correct.

Which of the following describes a financial advisor who is paid based on a percentage of products sold or purchased by clients?

Fee-based

Commission-only

Fee plus commission

Fee-only

Question 3

Your answer is correct.

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

Your answer is correct.

Which of the following would NOT be a major factor when choosing a personal financial planner?

education

affiliation

reputation

certification

Question 5

Your answer is correct.

The federal funds rate is the rate that

credit card issuers use as the teaser rate.

banks charge customers for short-term loans.

banks charge each other for short-term loans.

the Federal Reserve charges banks for short-term loans.

Question 6

Your answer is correct.

An expansion is a phase in the economic cycle that is characterized by

decreasing business investment and decreasing employment opportunities.

increasing business investment and decreasing employment opportunities.

increasing business investment and increasing employment opportunities.

decreasing business investment and increasing employment opportunities.

Question 7

Your answer is correct.

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

A CFP® has passed a rigorous exam.

A CFP® has worked in the banking industry.

A CFP® has at least five years of experience.

A CFP® majored in financial planning in college.

Question 8

Your answer is correct.

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

sensitivity analysis.

future value.

opportunity cost.

marginal reasoning.

Question 9

Your answer is correct.

The financial planning process includes five steps. Four of the steps are listed below:

Analyze your current financial status.

Implement your financial plan.

Monitor your progress and revise your plan as needed.

Organize your financial information and set short-term and long term goals.

What is the missing step?

Identify and evaluate alternative strategies for meeting your goals.

Understand the personal financial planning process.

Acquire the necessary decision-making skills and tools.

Build wealth and protection against emergencies.

Question 10

Your answer is correct.

In a fee-based arrangement, the planner is compensated with an annual fee that is usually

a set amount for all clients.

based on the number of financial products purchased.

waived for large investment portfolios.

based on the size of the client’s asset portfolio being managed.

Question 11

Your answer is correct.

Which of the following is NOT one of the steps in the personal financial planning process?

Purchase life insurance.

Implement a plan for achieving goals.

Identify and evaluating alternative strategies for achieving goals.

Develop short-term and long-term financial goals.

Question 12

Your answer is correct.

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 offset by commission

commission only

fee plus commission

fee only

Question 13

Your answer is correct.

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?

Certified Public Accountant (CPA)

Certified Financial Planner (CFP®)

Accredited Financial Planner (AFC)

Chartered Financial Consultant (ChFC)

Question 14

Your answer is correct.

The basic idea of the time value of money is that $1 to be received in the future is worth ______ $1 received today because of the value of the compound interest.

less than

more than

the same as

Question 15

Your answer is correct.

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

personal cash flow statement.

cost-benefit statement.

personal balance sheet.

liquidity statement.

Question 16

Your answer is correct.

Gross monthly income = $3,500

After-tax monthly income = $2,870

Total debt = $86,000

Total monthly debt payments = $402

Total assets = $113,000

Based on the information given above, what is the debt ratio?

3%

131%

47%

76%

Question 17

Your answer is correct.

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

future value of an annuity

present value of a lump sum

Question 18

Your answer is correct.

A personal cash flow statement

shows income and expenditures over a period of time.

uses the same information needed for the personal balance sheet.

shows income and expenditures at one specific point in time.

is necessary for calculating one’s net worth.

Question 19

Your answer is correct.

You estimate your monthly mortgage principal and interest will be $1,000, property taxes will be $160 per month, and homeowner’s insurance will be $50 per month. If your gross monthly income is $4,000 per month and your tax rate is 20 percent, what is your mortgage debt service ratio?

65.2%

60.5%

30.25%

37.8%

Question 20

Your answer is correct.

You expect to receive a sum of money 10 years from now, and you want to know how much it is worth today. Which time value of money calculation should be used to solve this problem?

future value of an annuity

present value of a lump sum

present value of an annuity

future value of a lump sum

Question 21

Your answer is correct.

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?

$15,225

$25,081

$188,922

$204,146

Question 22

Your answer is correct.

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.

future value of an annuity.

present value.

present value of an annuity.

Question 23

Your answer is correct.

Which of the following is true regarding future value?

the higher the interest rate, the lower the future value

the longer the term, the lower the future value

the shorter the term, the higher the future value

the lower the interest rate, the lower the future value

Question 24

Your answer is correct.

Your assets total $100,000. Your total debts are $80,000. Your net worth is

0.8.

$180,000.

$20,000.

1.2.

Question 25

Your answer is correct.

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