Practice Test GeeksFiCEP - Financial Counseling Certification Program Practice Test
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Finance Flashcards

7 cards from real FICEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Finance flashcards as text

  1. A client is enrolled in a High-Deductible Health Plan (HDHP). Which tax-advantaged account is specifically available to them for medical expenses?

    Answer: Health Savings Account (HSA)

    HSAs are exclusively available to individuals enrolled in qualifying HDHPs and offer triple tax advantages for medical expenses.

  2. Which credit scoring factor typically carries the greatest weight in a FICO score calculation?

    Answer: Payment history

    Payment history accounts for approximately 35% of a FICO score, making it the single most influential factor.

  3. A client has $10,000 in credit card debt at 22% APR and $5,000 in a student loan at 5% APR. The avalanche method would prioritize repayment of which debt first?

    Answer: Credit card debt, because it has the higher interest rate

    The avalanche method targets the highest-interest debt first to minimize total interest paid over time, regardless of balance size.

  4. In the context of retirement planning, what does the term 'sequence of returns risk' refer to?

    Answer: The risk that a retiree will outlive their assets due to poor investment returns early in retirement

    Sequence of returns risk is the danger that poor early-retirement investment returns, combined with withdrawals, can permanently deplete a portfolio even if long-term average returns are adequate.

  5. A client asks about the difference between a traditional IRA and a Roth IRA. Which statement correctly distinguishes them?

    Answer: Traditional IRA contributions may be tax-deductible now; Roth IRA qualified withdrawals are tax-free

    Traditional IRAs offer potential upfront tax deductions with taxable withdrawals, while Roth IRAs use after-tax contributions for tax-free qualified distributions.

  6. Which federal law requires lenders to disclose the Annual Percentage Rate (APR) and total finance charges to borrowers before credit is extended?

    Answer: Truth in Lending Act (TILA)

    The Truth in Lending Act (TILA), implemented through Regulation Z, mandates standardized disclosure of credit costs including APR and finance charges.

  7. A client's net worth is calculated by subtracting their total liabilities from their total assets. If a client has $180,000 in assets and $95,000 in liabilities, what is their net worth?

    Answer: $85,000

    Net worth equals total assets minus total liabilities: $180,000 − $95,000 = $85,000.