PFM Global Chapter 4

Which of the following is essential for a good budget:

Which of the following statement is correct: Statement 1: Budgets are not only guiding to spending and saving they are tools for self-evaluation; Statement 2: Design the budget with specific goals in mind

Arrange the following in order the steps of creating budget:1 Identify the client’s financial goals and determine what is required to reach them. 2 Present each category of income and expense as a percentage of the total. This will make year-to-year comparisons easier. 3 If expenses are too high, identify potential sources of additional income or places where expenses may be reduced. If expenses are lower than expected income, apply the excess to the categories of expenses that will bring the client closer to his or her goals. 4 Estimate income from all sources and expenses.5 Compare income and expenses to determine if expected expenses are equal to, greater than or less than expected income

Which of the following ratio should be calculated to learn how much cash (or equivalent) a client should have relative to overall net worth.

Which of the following ratio shows the number of months a client could continue to meet expenses from existing cash and cash equivalent assets after a total loss of income?

Which of the following ratio shows a client’s ability to service or repay debts?

Which of the following ratio measures liquidity with a focus on the client’s ability to repay debts and remain solvent?

An emergency fund will be created most likely for:

To get protected to some extent against the impact of loss of income which of the following would be least likely preferred:

When considering potential property loss—is probably the best financial tool to use for protection.

Which of the following is least likely a place to save or invest emergency fund:

Which of the following statement is correct: Statement 1 Liquidity means the ability to liquidate an asset into cash at short notice only; Statement 2 liquidity means the ability to liquidate an asset into cash at short notice and also that it can be liquidated at market value.

A client while making emergency fund think that all he is doing is putting money in a savings account with nothing going into investment or retirement accounts then what should the professional most likely do to maintain client continuity in process:

Which of the following statement is incorrect: Statement 1: In Capital utilization each payment comprises capital only; Statement 2: In Capital preservation depletes each payment partially comprises a return of both capital and earnings.

A regular budget identifies, and is built from, actual cash flows

A client having debt to assets ratio of 60 percent is it a favourable ratio for client financial condition

A planner advising his client to use equity investments as a funding vehicle for emergency fund is the advice correct.

As a financial professional, recognize that the special needs should not be casually dismissed or overlooked.

Probably the biggest potential impact of entrepreneurism is the loss of a steady income stream.