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CFP FINAL FANTASY EXAM WITH QUESTIONS AND CORRECT ANSWERS
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CFP FINAL FANTASY EXAM WITH QUESTIONS ANDCORRECT ANSWERS
PAP stands for- Answer personal automobile policy
PAP single limit- Answer 1 $ cap
Split Limit PAP - Answer x/y/z
x = max bodily injury (for 1 person)
y = all bodily injuries (for multiple people)
z = property damage
What is PAP Part A - Answer Liability
What is PAP Part D - Answer Damage to Your Auto
PAP Part D types - Answer Collision - dmg to vehicle caused by an accident coliding with
another inanimate OBJECT ((hitting something, but not deer)
Comprehensive - all other physical dmg (theft, animal, fires, falling objects, etc)
PAP exam tip. driver hits a deer is what - Answer COMPREHENSIVE and NOT collision
PLUP - Answer personal liability umbrella policy
What does PLUP do? - Answer Provides more liability above and beyond HO and PAP
,Underlying coverage reqs for PLUPs? - Answer Typically maintain stated min coverages
How do PLUPs work? - Answer Pay nothing until underlying policy limit is used up
What does and does NOT PLUP cover** - Answer Auto pt A), Home part E), but usually
also extends personal liability to slander/libel
Does NOT cover busi liability
Typically covers defense
Is a PLUP good rec?*** - Answer Yes.
Mike says we should have it
Can PLUP be extended to other stuff? If so like what? - Answer Boats, RVs
What happens if underlying limit is below required maintained insurance for a PLUP -
Answer pay the difference before it kicks PLUP kicks in
NPV is calculated how? - Answer irregular cash flows (CF0, j, and Nj)
What does NPV do? - Answer appraise cash flows w/ capital projects. Positive results =
do it. Negative = don't
Zero = do it as you have met your required rate of return
Key stroke for IRR - Answer Is TVM N, PV, FV, PMT and i
What does IRR tell us - Answer required rate of return to equalize cash flows of a
project/ investment (aka reate to make NPV zero)
, What are IRR examples - Answer YTM/YTC
Which has a weakness/asumption - IRR or NPV? - Answer IRR - reinventment rate is
assumed
NPV v IRR - Answer NPV is considered superior for unequal lives as there will be 1 NPV
but multiple IRR
IRR cannot be used with uneven cash flows
Two projects with given IRR and NPVs, how to choose? - Answer select higher NPV
RCY - Real compounding yield - probably refines IRR (internal rate of return) which
basically takes away the assumption of reinvestment and choose whatever rate you
want for fixed income income;
Wash Sale - Sell a security at a loss for tax purposes and buy within 30 days before or
after the sale date (span of 61 days) substantially the same or a 'substantially identical'
security.
Wash Sale? - Bonds - Unless you buy the same exact bond or bond fund, hard to violate
Wash Sale? - Stocks - Watch out before (or after) Convertible bonds = substantially
identical
Call option purchase
Wash sale, so what? give example Loss is disallowed, but disallowed loss is added to the
basis of new securities purchased
a possible example: bought KY stock 100, sold for 75. within 30 days, purchased KY at
90. Loss is disallowed but new basis is 115 (90+25)
Profitability Ratios - Answer Gross Profit Margin
Operating Profit Margin
Return on Assets (ROA)
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