Certified Financial Planner General Principles of Financial Planning

1.Nora Ellison has finished listing her pay, debts, insurance, and the people who rely on her. No goals are ranked yet. Which planning step comes next?

2.Luis Ortega and his planner just ranked two goals: clear the card balance, then save a house fund. They have not tested whether his present saving can do both. Which step comes next?

3.Amina Shah's planner measured her present saving against the two goals she had already ranked. The gap is known, and no remedy is written yet. Which step comes next?

4.Jonah Blake has written a recommendation: raise the monthly transfer and refinance the auto loan. He has not walked the client through it. Which step comes next?

5.Priya Raman explained each recommendation in a meeting, and the client agreed. No account has been opened and no form has been signed. Which step comes next?

6.Owen Grant's client signed the forms, the new account is open, and the first transfer posted. The agreed actions are in place. Which step comes next?

7.Hana Ito has the client's tax returns, pay, and debt list. The client has not said which goals matter. Hana wants to suggest products today. Which step comes next?

8.Marco Velez set a retirement date and a target balance. The planner found that today's contribution misses that date by four years. No remedy is written. Which step comes next?

9.Elena Brooks just decided the car payoff comes before the down-payment fund. Her paycheck and expenses are already on file. She has not checked whether today's budget can carry both. Which step comes next?

10.Camille Nguyen has $4,200 in checking, a car worth $18,000, and a retirement account of $36,000. She owes $9,000 on the car and $2,400 on a card. What is her net worth?

11.Andre Cole takes home $6,400 in a month. His spending in that same month is $5,100. What is his cash-flow surplus?

12.Ruth Keller's home is worth $320,000 and the mortgage is $210,000. She has $15,000 in savings and a student loan of $28,000. What is her net worth?

13.Benito Alvarez earns $72,000 a year after tax. His expenses for that year are $58,500. What is his cash-flow surplus?

14.Sophie Marin has $8,000 in the bank and $45,000 of investments. She owes $3,000 on a card and $7,000 on a personal loan. She also received $60,000 of salary this year. What is her net worth?

15.Devon Price brings home $4,900 a month. Rent is $1,600, other necessary costs are $1,900, and restaurant meals are $400. If every one of those items is an expense, what is the cash-flow surplus?

16.Lila Cho owns shop equipment worth $22,000 and holds $5,500 in cash. She has an equipment loan of $9,000 and a tax bill of $2,000. What is her net worth?

17.Greg Hale earns $3,800 a month and his spouse earns $2,600. Their household expenses are $4,700. What is the household cash-flow surplus?

18.Imani Brooks's condo is worth $250,000 with a $190,000 mortgage. Her car is worth $12,000 with a $14,000 loan. A brokerage account holds $30,000. What is her net worth?

19.Felix Romero keeps $12,000 in savings. In a job loss he would still pay $3,000 a month for rent, food, utilities, and insurance. Food alone is $1,000 of that. How many months of necessary expenses does the fund cover?

20.Greta Holm's necessary spending is $2,500 a month. She wants an emergency fund of 6 months and has $9,000 saved. How many more dollars does she need?

21.Hector Lang has $18,000 saved. Necessary costs are $2,000 a month. He also spends $800 on trips and hobbies, which he would cut in a job loss. How many months of necessary expenses does the $18,000 cover?

22.Jade Okonkwo has $8,000 in an emergency account. Rent, food, transit, and insurance she cannot drop total $1,600 a month. How many months does the account cover?

23.Karl Jensen's necessary costs are $4,200 a month. He wants 3 months set aside and has already saved $6,000. How much more must he save to reach that target?

24.Leah Park has $10,000 saved. Monthly necessary costs are rent $1,200, food $400, utilities $200, and insurance $200. Hobbies of $500 would stop in a layoff. How many months of necessary expenses are covered?

25.Mateo and Iris Chen keep $20,000 for emergencies. Their necessary household costs are $5,000 a month. How many months does that reserve cover?

26.Nadia Petrov wants 6 months of necessary costs in reserve. Those costs are $1,800 a month, and she has already saved $10,800. How many more dollars does she need?

27.Omar Farouk has $9,600 saved for emergencies. Necessary monthly costs are $3,200. A gym fee of $80 is not in that $3,200 and would be cancelled if he lost work. How many months of necessary expenses does he have?

28.Paula Singh owes $4,000 on a card at 21 percent, $800 on a card at 12 percent, and $9,000 on a car loan at 5 percent. She sends an extra $200 a month to the highest rate first. Which balance gets the extra $200?

29.Quentin Doyle chose the smallest-balance payoff method. He owes $1,500 on a card at 19 percent, $600 on a personal loan at 9 percent, and $11,000 on a car at 4 percent. An extra $150 a month is available. Which debt gets that extra payment first?

30.The lender told Rosa Delgado that housing costs should stay within 28 percent of gross monthly pay. Her gross pay is $8,000. What is the most her monthly housing cost can be under that stated guideline?

31.A lender told Samir Haddad that total debt payments should stay within 36 percent of gross monthly pay. He earns $6,000 gross and already pays $1,500 for housing. Under that stated guideline, how much is left for his other monthly debt payments?

32.Tina Alvarez owes $4,000 at 22 percent on a card, $700 at 10 percent on a store account, and $15,000 at 8 percent on a truck. One year of interest would be about $880, $70, and $1,200. She applies extra cash to the highest rate first. Where does the extra cash go?

33.Victor Nguyen follows the smallest-balance method. He owes $450 to a clinic at 0 percent, $2,200 on a card at 24 percent, and $14,000 in student loans at 6 percent. He has an extra $100 this month. Which debt receives it first?

34.A lender's guideline, stated to Wendy Clark, is that housing should be at most 28 percent of gross monthly pay. She earns $5,000 gross. The apartment she wants costs $1,550 a month. Which statement matches that guideline?

35.A credit union told Yolanda Perez that total monthly debt payments should stay within 36 percent of gross pay. She earns $10,000 gross. She already pays $2,200 housing, $400 car, $300 cards, and $200 student loans. She wants a new $700 monthly loan. Under that stated guideline, what happens?

36.Zane Carter owes $2,500 at 24 percent, $5,000 at 9 percent, and $900 at 16 percent. A year of interest is about $600, $450, and $144. He directs extra payments to the highest rate first. Which debt gets the extra payment?

37.Helen Cho sets aside $10,000 for a workshop she will pay three years from now. The account earns 10 percent a year, compounded once a year. What is the future value of that single sum?

38.Malik Reid must pay $12,100 in two years for a boat slip. He can earn 10 percent a year until then. What single sum today grows to that $12,100 bill?

39.Nia Kim will deposit $1,000 at the end of each year for four years. The account earns 10 percent a year. What is the balance right after the fourth deposit?

40.Otto Blake puts $2,500 into a two-year certificate at 4 percent a year, compounded annually. What is the future value of that single sum?

41.Pilar Santos will receive $2,000 at the end of each of the next four years from a family note. The discount factors she was given are 0.95, 0.90, 0.86, and 0.82. What is the present value of this ordinary annuity?

42.In two years Leo Vasquez needs $2,704 for shop equipment. He can earn 4 percent a year until then. What single sum set aside today grows to $2,704?

43.Adewale Ortiz places $4,000 in an account that earns 5 percent a year, compounded annually, for two years. He will use it for a dental bill. What is the future value?

44.Jules Ellis deposits $5,000 at the end of each year for four years into an account earning 10 percent a year. What is the balance immediately after the fourth deposit?

45.Esther Lang will receive $13,310 in three years when a note pays off. The discount rate is 10 percent a year. What is that single sum worth today?

46.Carl Diaz's bond fund rose 21 percent this year. The prices he pays for groceries, rent, and fuel rose 10 percent. Using (1 + nominal) / (1 + inflation) - 1, what is his approximate real return?

47.Bea Solomon's credit-union certificate paid a 12 percent nominal return. Inflation over that same year was 5 percent. What is her approximate real return?

48.Ibrahim Nasser was credited with an 8 percent nominal return in his pension fund. Inflation was 3 percent. What is the approximate real return on that credit?

49.June Park inherited a mutual fund that gained 10 percent in nominal value. Consumer prices rose 4 percent in that year. What is the approximate real return?

50.Kenji Watanabe received employer stock that rose 15 percent in dollar value. Prices rose 5 percent over the same period. What is the approximate real return on that stock?

51.Laila Haddad earned 6 percent nominal on a savings bond she has held all year. Inflation was 4 percent. What is the approximate spending-power return?

52.Marcus Webb lent money to his cousin and was paid a 20 percent nominal return. Inflation that year was 8 percent. What is the approximate real return on the loan?

53.Nell Cho's money-market fund returned 4 percent nominal while she was saving for a move. Inflation was 1 percent. What is the approximate real return?

54.Oscar Bennett compared his dividend fund, up 9 percent nominal, with 3 percent inflation in the same year. What is the approximate real return?

55.Paige Nguyen's state-university bill is $20,000 this year. Her child starts in 2 years, and she expects college prices to rise 5 percent a year. What will one year cost then?

56.Quincy Adler will enter a community-college program in 2 years. Today's tuition is $15,000, and he expects that price to rise 10 percent a year. What is the future cost of one year?

57.Renee Kim is budgeting for a conservatory year that costs $25,000 today. She enrolls in 2 years and uses 4 percent a year for college inflation. What is the future cost of that year?

58.Soren Cole is planning a $12,000 trade-school certificate. Classes start in 3 years. He grows that price by 10 percent a year. What will the certificate cost then?

59.Tasha Williams is pricing a graduate year at $30,000 in today's dollars. She starts in 2 years and uses 2 percent annual college inflation. What is the future cost?

60.Uri Goldberg's out-of-state tuition is $40,000 today. His daughter starts college in 2 years. He inflates the bill by 5 percent a year. What is one year of tuition then?

61.Vera Lopez is saving for a $10,000 welding program that starts in 2 years. She expects the price to rise 10 percent a year. What will the program cost at the start?

62.Walter Cheng is pricing a freshman room-and-board package of $8,000 in today's dollars. His son starts in 2 years. Walter uses 5 percent annual inflation. What is the future cost of that package?

63.Yara Mensah expects one college year to cost $20,000 in today's prices. Her niece starts in 3 years, and Yara uses 10 percent annual inflation. What is the future cost of that year?

64.Arthur Bell is saving for his daughter Mia's college. If Mia never enrolls, Arthur wants to keep control and be able to name his nephew instead. Which account fits that wish?

65.Bianca Cruz's mother owns a 529 for her. Bianca's uncle put the same dollar amount in a custodial account in Bianca's name. For financial aid, which holding is treated as Bianca's own asset?

66.Chris Dalton wants one pot that can buy his son a used car for a job and later help with college. The car is not a college expense. Which account can pay for that car for the child's benefit?

67.Dana Ishikawa is custodian of an account she funded in her son Eli's name under the state's gift-to-minors rules. Eli reaches the age when control passes to the child. What happens?

68.Farah Khan owns the 529 that names her daughter as beneficiary. On an aid form that sorts assets by owner, at whose level is that 529 counted?

69.George Halliday's older child received a full scholarship. George owns a 529 for that child and also has a younger child. He wants the 529 aimed at the younger child. What can he do?

70.Hollis Weiss's 529 holds $9,000. This term's bill is $7,000 of tuition and $2,000 of required campus housing. The family also wants $1,000 from the plan for a vacation. What can this 529 pay?

71.Ivan Petrova's father saved $20,000 in a 529 the father owns. Ivan's grandmother put $20,000 in a custodial account that Ivan owns. Which balance is counted at the parent's asset level?

72.Julia Park wants money that can buy her son a musical instrument now and help with college later. She accepts that he will control the funds when he reaches adulthood. Which account fits?

73.The Coverdell account for Noah Ellis's son accepts at most $2,000 from all givers combined this year. Noah has already put in $750. How much more can go in this year?

74.A Coverdell for Lena Ortiz's daughter has a $2,000 combined annual limit. Lena already contributed $1,500 this year. The child's aunt wants to add $1,000. How much of the aunt's gift can still go in?

75.Pete Morales may buy at most $10,000 of Series I savings bonds in his own name this year under the limit he was given. He has bought $4,000 so far. How much more may he buy this year?

76.Rita Singh deposited $2,600 into a Coverdell whose stated limit is $2,000 per child this year. How much of that deposit is over the limit?

77.Steve Okada was given this savings-bond rule: tax-free interest equals total interest times qualified tuition divided by bond proceeds, and only if household income is under a $120,000 limit. His income is $90,000. Interest is $1,000, tuition is $4,000, and proceeds are $10,000. How much interest is tax-free under that rule?

78.Amira Brennan was told the Coverdell limit is $2,000 per child this year. She has three children and has contributed nothing yet. What is the most she can put in across all three accounts?

79.The bond program Uma Shah read excludes education interest only when household income is under $115,000. Uma's household income is $130,000. Bond interest is $800, and she paid college tuition. How much of that interest can she exclude under the stated income limit?

80.A grandparent already put $2,000 into a Coverdell for Theo Ward. The stated limit is $2,000 per child from all contributors this year. Theo's father wants to add another $2,000. How much of the father's deposit can remain?

81.Wes and Kim Ellis were told that each person may buy up to $10,000 of Series I savings bonds this year. Together they want $25,000 of bonds. What is the most the two of them can buy under that per-person limit?

82.Ada Flores can lease a car for $2,000 at signing plus $350 a month for 36 months, and she would own nothing at the end. Buying means $3,000 down plus $400 a month for 36 months, then selling the car for $8,000. Which choice has the lower net cash cost?

83.Ben Cho can lease a truck for 24 months at $420 a month with nothing due at signing. Buying means $5,000 down and $300 a month for 24 months, and the truck could be sold for $1,000 at the end. Which choice has the lower net cash cost?

84.Cara Singh needs $8,000 for a furnace and will repay that full amount in one lump sum after one year. A credit card would charge 18 percent. A home-equity loan would charge 6 percent. Which source has the lower interest cost?

85.Drew Patel can lease a car for $1,500 at signing plus $275 a month for 48 months. Buying is $2,000 down plus $310 a month for 48 months, with a $4,000 resale at the end. Which choice has the lower net cash cost?

86.Erin Walsh needs $2,400 for a dental bill and will pay it in full in 4 months. The card charges 0 percent for 6 months, then 22 percent. A home-equity loan charges 8 percent a year from the first day. Which source costs less interest?

87.Frank Molina can lease a sedan for $1,000 at signing plus $320 a month for 36 months. Buying is $2,000 down plus $340 a month for 36 months, then a $2,000 resale. Which choice has the lower net cash cost?

88.Gina Rossi needs $12,000 for a kitchen repair. She will pay interest only for 2 years, then repay the $12,000. A card charges 21 percent. A home-equity loan charges 5 percent. Which source has the lower interest cost?

89.Hugo Berg can lease a van for $600 at signing plus $290 a month for 36 months. Buying is $3,500 down plus $260 a month for 36 months, and the van is worth $1,200 at the end. Which choice has the lower net cash cost?

90.Iris Feldman needs $5,000 for a move and will repay it in 12 months. The card charges 0 percent for those 12 months. A home-equity loan charges 7 percent for the year. Which source has the lower interest cost for the move?

91.Nina Frost will buy hearing aids in 2 years. They cost $4,000 today. Inflation is 10 percent a year, and her $4,000 account earns 10 percent nominal a year. A coworker says that return gives her 10 percent more buying power. What is true?

92.Paul Nguyen's workshop costs $10,000 today, and he will pay for it in 1 year. Inflation of 7 percent applies to the price. His $10,000 earns 4 percent nominal. How does the ending balance compare with the future price?

93.Rita Solano wants a van conversion that costs $20,000 today. She will buy it in 1 year, and inflation is 5 percent. Her $20,000 earns 8 percent nominal. How much is left after she pays the inflated price?

94.Sam Ibarra has $8,000 for a kitchen redo in 2 years. Inflation on the job is 5 percent a year. The account earns 5 percent nominal. A friend says he will have 5 percent more kitchen than today's job. What is true?

95.Tara Singh will pay a $10,000 goal in 2 years. Inflation is 10 percent a year. She invests the $10,000 at a 4 percent nominal return. How far short of the inflated price is the account?

96.Victor Hale has $6,000 for a move one year from now. Inflation is 3 percent. The fund earns 9 percent nominal. After he pays the inflated cost, how many dollars are left?

97.Wendy Salazar needs $15,000 of dental work in one year. Inflation is 4 percent. She has $15,000 earning 4 percent nominal and expects money left over. What is left after the inflated bill?

98.Xavier Boone will pay for a boat slip in one year. It costs $9,000 today, and inflation is 5 percent. His $9,000 account earns 12 percent nominal. After the inflated price, how much is left?

99.Yolanda Briggs keeps $2,000 in a jar for a hearing-aid upgrade in 2 years. The jar earns a 0 percent nominal return. Inflation is 10 percent a year, and the upgrade costs $2,000 today. What is the future cost, and what is the gap?

100.Alan Ruiz finished his plan in March. In June he loses his job and the paycheck stops. His planner's habit is to file a plan and never look again. What should the job loss cause?

101.Brenda Moore's plan was implemented last spring. She just had a baby, and the child is not in the goals, the cash needs, or the insurance picture. What should happen next?

102.Carlos Diaz inherits $80,000. The planner says the file can stay in the drawer because no market review was scheduled. What should the inheritance trigger?

103.Dina Cole finalized a divorce. The old plan named her former spouse on accounts and assumed two incomes. The planner has not opened the file since implementation. What is required now?

104.Evan Brooks's plan assumes he works to age 67. A permanent injury stops his work at 54. The signed plan sits in a closed file. What should the planner do?

105.Faye Singh marries, and the couple will share rent and support her spouse's child. Her plan was built when she lived alone. The planner says a filed plan is not reopened for a wedding. What should follow the marriage?

106.Gavin Patel's plan was funded and then filed. His father dies, and Gavin now supports his mother, adding $700 a month he did not plan for. What is the fitting response?

107.Harpreet Gill's plan targeted retirement at 66. She has decided to retire at 61. The planner says the original file can stand because nobody asked for a market review. What should the earlier date cause?

108.Idris Hale's planner implemented the plan, filed it, and does not schedule reviews. Idris's salary is cut by $800 a month. Which response fits the monitoring step?