Practice Test Geeks(RFC) Registered Financial Consultant Practice Test
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Cash Flow & Debt Management Flashcards

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

Read the first 7 Cash Flow & Debt Management flashcards as text

  1. A client with $50,000 in student loans at 6% is considering whether to pay them off aggressively or invest. Which factor is MOST relevant to the RFC's recommendation?

    Answer: The client's expected after-tax investment return vs. the loan interest rate

    If expected after-tax investment returns exceed the loan rate, investing may be preferable; if not, aggressive repayment is better.

  2. Which of the following is NOT a component typically found in a personal cash flow statement?

    Answer: Net worth

    Net worth is a balance sheet concept reflecting assets minus liabilities, not a cash flow item.

  3. A client carries $8,000 in credit card debt at 19.99% APR. If they make only minimum payments of 2% of the balance, approximately how long will it take to pay off?

    Answer: 20+ years

    Minimum-only payments on high-APR revolving debt can extend repayment to 20+ years due to the high interest accrual.

  4. In RFC practice, a 'cash flow gap analysis' is used primarily to:

    Answer: Identify periods when outflows will exceed inflows and plan accordingly

    A cash flow gap analysis maps expected inflows and outflows over time to identify months where liquidity may be insufficient.

  5. Which type of debt is MOST likely to be dischargeable in a Chapter 7 personal bankruptcy?

    Answer: Unsecured credit card debt

    Unsecured credit card debt is generally dischargeable in Chapter 7, while student loans, child support, and recent taxes are typically not.

  6. A client's debt-to-income ratio is 42%. From an RFC perspective, this MOST likely indicates:

    Answer: The client may face difficulty qualifying for additional credit and should reduce debt

    A DTI above 36-43% is considered high by most lenders and signals the client is over-leveraged relative to income.

  7. When a client uses a home equity line of credit (HELOC) to consolidate high-interest debt, the PRIMARY risk is:

    Answer: Unsecured debt is converted to secured debt, putting the home at risk

    Converting unsecured debt to a HELOC makes the client's home collateral, creating risk of foreclosure if payments are missed.

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