FPQP® knowledge test exam toolkit questions and verified
financial solutions |already graded a+| newest 2025/2026
Sole Proprietorship - correct answer liable for all obligations
General Partnership - correct answer unlimited personal liability
limited partnership - correct answer restricted to only investment of partnership
family partnership - correct answer like limited, but within family for estate and tax
planning purposes
C Corp - correct answer Subject to dual taxation, taxed as income for shareholders,
limited liability, true corporation
S Corp - correct answer Taxed at corporation before dividends go to shareholders,
smaller than C Corp
LLC - correct answer Limited Liability Corporation, combines advantages of limited
liability of corps with tax purposes
Which statement will give you net worth? - correct answer statement of financial
planning
what records do you need to pull to create financial statements? - correct answer
mortgage amortization schedules, insurance statements, bank statements, CC
statements, valuation of private property
What are the 6 areas of to evaluate? - correct answer 1. emergency fund
2. level of debt
3. level of savings
,4. diversification of assets
5. retirement planning
6. taxes
Types of mortgage payments - correct answer biweekly, monthly, graduated payment,
interest only, balloon, reverse
graduate payment mortgage - correct answer a fixed rate loan whose monthly
payments of principal and interest increase over time and then level off
interest-only mortgage - correct answer A mortgage that only requires the payment of
interest for a stated period of time with the principal due at the end of the term.
Balloon Mortgage Payment - correct answer A large payment during the term of a
mortgage, often at the end.
reverse mortgage - correct answer A loan based on the equity in a home, that provides
elderly homeowners with tax-free income and is paid back with interest when the home
is sold or the homeowner dies.
Which of the following is cash/cash equivalent?
-CD
-bond mutual fund
-salary and wages
-common stock - correct answer CD
How does an assumption on the future rate of inflation impact the achievement of a
specific goal?
- a rate of inflation that is too low may mean that more years will be needed to achieve
the goal
,- a rate of inflation assumption that is too high may allow greater investment flexibility in
achieving the goal
- a rate of inflation assumption that is high my mean that fewer dollars need to be
allocated to the goal - correct answer a rate of inflation that is too low may mean that
more years will be needed to achieve the goal
if the inflation rate is underestimated, it will take more years to achieve goal since
inflation will likely increase the cost of the goal
4 types of risk management - correct answer risk transfer
risk avoidance
risk reduction
risk retention
3 rules of risk management - correct answer 1. don't risk more than you can afford to
lose
2. don't risk a lot for a little
3. consider the odds
pure risk - correct answer either no loss will occur or a loss will occur (no chance for a
gain)
speculative risk - correct answer A chance of loss or gain (ie stock market)
4 types of pure risk - correct answer 1. personal risk
2. property risk
3. liability risk
4. failure of others
peril - correct answer a cause of loss (ie fire)
, hazard - correct answer something that increases the chance of loss (ie oily rags)
moral hazard - correct answer when people are dishonest (ex. primary source of
insurance fraud)
morale hazard - correct answer when people are careless because they have
insurance
elements of insurable risk - correct answer 1. law of large numbers
2. loss must be accidental
3. definite and measurable
4. must not be catastrophic (to insurance co)
indemnity - correct answer to be made whole
subrogation clause - correct answer insurance company gets paid back before you get
any more money; you cannot profit from the loss
mutual companies - correct answer Owned by the policy owners and issue
participating policies.
stock companies - correct answer publicly traded, owned by stock holders, don't need
policies
participating policies - correct answer Insurance that pays dividends to policyholders.
nonparticipating policy - correct answer a policy that does not pay dividends, cannot be
sold by mutual companies
financial solutions |already graded a+| newest 2025/2026
Sole Proprietorship - correct answer liable for all obligations
General Partnership - correct answer unlimited personal liability
limited partnership - correct answer restricted to only investment of partnership
family partnership - correct answer like limited, but within family for estate and tax
planning purposes
C Corp - correct answer Subject to dual taxation, taxed as income for shareholders,
limited liability, true corporation
S Corp - correct answer Taxed at corporation before dividends go to shareholders,
smaller than C Corp
LLC - correct answer Limited Liability Corporation, combines advantages of limited
liability of corps with tax purposes
Which statement will give you net worth? - correct answer statement of financial
planning
what records do you need to pull to create financial statements? - correct answer
mortgage amortization schedules, insurance statements, bank statements, CC
statements, valuation of private property
What are the 6 areas of to evaluate? - correct answer 1. emergency fund
2. level of debt
3. level of savings
,4. diversification of assets
5. retirement planning
6. taxes
Types of mortgage payments - correct answer biweekly, monthly, graduated payment,
interest only, balloon, reverse
graduate payment mortgage - correct answer a fixed rate loan whose monthly
payments of principal and interest increase over time and then level off
interest-only mortgage - correct answer A mortgage that only requires the payment of
interest for a stated period of time with the principal due at the end of the term.
Balloon Mortgage Payment - correct answer A large payment during the term of a
mortgage, often at the end.
reverse mortgage - correct answer A loan based on the equity in a home, that provides
elderly homeowners with tax-free income and is paid back with interest when the home
is sold or the homeowner dies.
Which of the following is cash/cash equivalent?
-CD
-bond mutual fund
-salary and wages
-common stock - correct answer CD
How does an assumption on the future rate of inflation impact the achievement of a
specific goal?
- a rate of inflation that is too low may mean that more years will be needed to achieve
the goal
,- a rate of inflation assumption that is too high may allow greater investment flexibility in
achieving the goal
- a rate of inflation assumption that is high my mean that fewer dollars need to be
allocated to the goal - correct answer a rate of inflation that is too low may mean that
more years will be needed to achieve the goal
if the inflation rate is underestimated, it will take more years to achieve goal since
inflation will likely increase the cost of the goal
4 types of risk management - correct answer risk transfer
risk avoidance
risk reduction
risk retention
3 rules of risk management - correct answer 1. don't risk more than you can afford to
lose
2. don't risk a lot for a little
3. consider the odds
pure risk - correct answer either no loss will occur or a loss will occur (no chance for a
gain)
speculative risk - correct answer A chance of loss or gain (ie stock market)
4 types of pure risk - correct answer 1. personal risk
2. property risk
3. liability risk
4. failure of others
peril - correct answer a cause of loss (ie fire)
, hazard - correct answer something that increases the chance of loss (ie oily rags)
moral hazard - correct answer when people are dishonest (ex. primary source of
insurance fraud)
morale hazard - correct answer when people are careless because they have
insurance
elements of insurable risk - correct answer 1. law of large numbers
2. loss must be accidental
3. definite and measurable
4. must not be catastrophic (to insurance co)
indemnity - correct answer to be made whole
subrogation clause - correct answer insurance company gets paid back before you get
any more money; you cannot profit from the loss
mutual companies - correct answer Owned by the policy owners and issue
participating policies.
stock companies - correct answer publicly traded, owned by stock holders, don't need
policies
participating policies - correct answer Insurance that pays dividends to policyholders.
nonparticipating policy - correct answer a policy that does not pay dividends, cannot be
sold by mutual companies
