Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 7
1. What is the primary focus of Lesson 6 in the Financial Planning Certification Exam Part 1?
a) Principles of insurance
b) Mortgage comparison and calculation
c) Investment strategies
d) Tax planning techniques
2. Which financial calculator is mentioned as a valuable tool for mortgage calculations?
a) HP 10B
b) TI-84 Plus
c) HP 12C
d) Casio fx-991EX
3. What does the term “PV” stand for in mortgage calculations using the HP 12C calculator?
a) Payment Value
b) Present Value
c) Principal Value
d) Profit Variation
4. How does changing the interest rate affect monthly mortgage payments?
a) Higher interest rates result in lower monthly payments
b) Lower interest rates result in higher monthly payments
c) Interest rates have no effect on monthly payments
d) Monthly payments remain constant regardless of interest rates
5. What is the purpose of encouraging clients to pay off their mortgages over a shorter period?
a) To increase total interest paid
b) To minimize savings for retirement
c) To reduce total interest paid
d) To prolong the mortgage term
6. What is the maximum coverage provided by FDIC insurance for bank accounts per depositor?
a) $100,000
b) $250,000
c) $500,000
d) $1,000,000
7. Which type of mortgage loan requires no down payment and is available only to veterans of the US Armed Services?
a) FHA loan
b) Interest-only loan
c) VA loan
d) Adjustable-rate mortgage
8. What is the purpose of SIPC insurance for brokerage accounts?
a) To cover foreign exchange trades
b) To protect against bankruptcy of the brokerage firm
c) To provide insurance for property taxes
d) To ensure against inflation risks
9. What happens to monthly payments on adjustable-rate mortgages after the initial teaser rate period ends?
a) They remain unchanged
b) They decrease significantly
c) They increase or decrease based on market conditions
d) They increase or decrease based on the client’s credit score
10. How does FDIC insurance coverage vary for accounts held jointly with another individual?
a) Coverage doubles for joint accounts
b) Coverage remains the same for joint accounts
c) Coverage decreases for joint accounts
d) Coverage increases for joint accounts
11. What is the primary function of the Federal Deposit Insurance Corporation (FDIC)?
a) To regulate interest rates
b) To insure bank deposits
c) To provide mortgage loans
d) To manage stock market investments
12. Which financial institution provides coverage through the National Credit Union Administration (NCUA)?
a) Credit unions
b) Investment banks
c) Commercial banks
d) Mortgage lenders
13. What is the primary risk associated with adjustable-rate mortgages (ARMs)?
a) Fixed monthly payments
b) Uncertainty in future monthly payments
c) Guaranteed interest rates
d) Stable mortgage terms
14. Which type of mortgage loan allows clients to pay only the interest for a specified term?
a) Fixed-rate mortgage
b) Variable-rate mortgage
c) Interest-only loan
d) Reverse mortgage
15. What is the maximum coverage provided by SIPC insurance for brokerage accounts?
a) $250,000
b) $500,000
c) $1,000,000
d) No coverage
16. Which financial tool allows clients to tap into the equity of their homes for additional funds?
a) Mortgage insurance
b) Home equity loan
c) Adjustable-rate mortgage
d) Interest-only loan
17. What happens to mortgage payments if interest rates rise significantly on adjustable-rate mortgages?
a) Payments decrease
b) Payments remain unchanged
c) Payments increase
d) Payments become interest-free
18. What is the primary purpose of encouraging clients to pay off mortgages over a shorter period?
a) To increase total interest paid
b) To minimize savings for retirement
c) To reduce total interest paid
d) To prolong the mortgage term
19. What type of loan is insured by the Federal Housing Administration (FHA)?
a) VA loan
b) Interest-only loan
c) FHA loan
d) Adjustable-rate mortgage
20. Which financial calculator is recommended for mortgage calculations in this lesson?
a) HP 10B
b) TI-84 Plus
c) HP 12C
d) Casio fx-991EX
Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 7
Answers:
1 b) Mortgage comparison and calculation
2 c) HP 12C
3 b) Present Value
4 b) Lower interest rates result in higher monthly payments
5 c) To reduce total interest paid
6 b) $250,000
7 c) VA loan
8 b) To protect against bankruptcy of the brokerage firm
9 c) They increase or decrease based on market conditions
10 b) Coverage remains the same for joint accounts
11 b) To insure bank deposits
12 a) Credit unions
13 b) Uncertainty in future monthly payments
14 c) Interest-only loan
15 a) $250,000
16 b) Home equity loan
17 c) Payments increase
18 c) To reduce total interest paid
19 c) FHA loan
20 c) HP 12C
End Of Quiz Understanding the Financial Planning Certification Exam Part 1 Lesson 7
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