AFC Practice (Units 1 -4)

Aubrey has a goal to spend less than she makes each month. Currently her expenses exceed her income by about $75 every month. What strategies could be suggested as part of the brainstorming process to help her reach her goal?

-Budget -Look for ways to lower expenses -Look for ways to increase income

What are some possible resources a client may have?

-Savings -Support System -Credit History - Willingness to work hard

Define Consumer Price Index

Statistics that measures inflation monthly. A broad measure of changes in prices and goods purchased for consumption by urban households.

What are some various items to consider with a job offer?

Compare salary offers Compare Salary to Cost of Living Compare community resources Wait and Negotiate

What is a fiduciary standard

Financial advisors must always act in the best interest of the client.

What is the Time Value of Money

Present Value (P) times Rate (R) times Time (T).

A motor home would be an example of a(n) ... a. monetary asset. b. net worth asset. c. tangible asset. d. investment asset.

c. tangible asset

A(n)________ is a type of employee benefit plan where employees choose their benefits from a list of taxable cash one or more qualified nontaxable benefits. a. Cafeteria plan b. open-enrollment plan c. tax-advantaged plan d. employee directed plan

a. Cafeteria

Which of the following would be a process goal? a. Establish a facilitate counseling relationship b. reduce credit card debt c. buy a home d. improve a credit score

a. Establish a facilitate counseling relationship

In which of the stages of counseling would a counselor give an overview of the client-counselor relationship? a. Initiating. b. Exploring. c. Understanding. d. Acting.

a. Initiating

A measure of the goods and services that one's income will buy is its_______. a. Purchasing power b. Utility c. Interest d. Marginal benefit

a. Purchasing power

What are the important points to remember about helping clients create good solutions or strategies for accomplishing goals?

-Goals are under client's control -Specific -Simple -Positive -Cost of alternatives -plan for action

What are some thing to consider when helping clients prioritize goals?

-Resources available -High prioritize - Low prioritize -measurable and attainable -time frame

What are some suggestions a counselor could give to a client about what to do when losing a job?

-Think of yourself as being employed; your job is to find a job) -Get finances in order -Tap into your network -Take a hard look at prospects for rebound

What challenges might a counselor have when trying to help a client write effective goals?

1. The client wants the counselor to do the work for them 2. The Client's words are unclear 3. The Client has Vague goals 4. The Client's goals are Not measurable

What are the seven principals of goal setting?

1. Under client's control 2. Specify what the client will be doing when on track 3. Specify the actions, percentages, degrees, or numbers 4. Emphasizes what the client will do or how they will behave 5. The goals may specify the conditions under which behavior can be observed 6. Stated in positive terms 7. Stated in client's language

What is rule 72?

72 divided by the interest rate equals the number of years for the principal dollar amount to double.

Define Gross Domestic Product

A pro-cycle economic indicator, broadest measure of economic health. Reports how much economic activity has occurred. Growth of 2% is low, 3% is safe, and 4% worries economists.

What are the three learning styles?

Auditory - hearing Visual - seeing Kinesthetic - feeling or doing

Define Leading Economic Indicators

Indicators that change before the economy does; helps predict how the economy will do in the future. Stock market is the leading economic indicator because it declines before the economy does.

What should take place during the Initiating, exploring, understanding, and acting counseling steps?

Initiating: Developing client relationship, discuss roles, responsibilities, ethics, confidentiality. Exploring: What does the client want to accomplish? Gathering information concerning finances. Understanding: Creating an action plan, brainstorming ideas, develop ways to monitor progress. Acting: Work on implementing action plans, evaluate action plans, make adjustments as needed.

Describe Monetary, Tangible, and Investment assets

Monetary Assets: Liquid Assets and Cash equivalents Tangible Assets: Personal Property worth value Investment Assets: Capital Assets, property, stocks, and bonds.

What are four general rules of communication?

Provide an overall perspective Use simplest words possible Be specific Use repetition

Define Summarizing

Putting importing information together into a summary

What are the eight elements of persuasion?

Reciprocation - Obligation to give back Scarcity - Limited items or opportunity Authority - Suggestions of those in authority Credibility - History of trust Comparability - Not so bad in comparison Social Proof - Everyone else is doing it The Power of Because: "...because I said so" Primacy and Recency - First and Last remembered

What are the three basic forms of financial counseling?

Remedial Preventative Productive

Define Restating

Repeating what client has said

Define Paraphrasing

Restating essential content in your own words

Why would a counselor shift the responsibility to the client?

So they believe they have control of their destiny, enhancing confidence.

What are the methods of communication?

Verbal - Spoken Word Non-verbal - Body Language Space - Space between individuals Tone - Rate, Volume, and how things are said

When is a person insolvent?

When a person owes more than he/she owns and has a negative net worth.

Which of the following statements about pacing is true? a. Pacing is matching or mirroring another person's behavior. b.Nonverbal pacing is an abnormal behavior and should be avoided. c. Paraphrasing is an insulting form of pacing and should only be used selectively. d. Pacing will not change with a client's learning style.

a. Pacing is matching or mirroring another person's behavior.

________ is the phase of the business cycle where production is low, unemployment is high, and retail sales are low. a. Recession b. Inflation c. Prosperity d. Recovery

a. Recession

Which of the following is not required before an applicant may obtain an Accredited Credit Counselor certificate? a. a college degree b. passing the ACC exam with a score of 70% or above c. having six months experience in the credit counseling industry d. agreeing to adhere to the code of ethics

a. a college degree

The amount of take-home pay remaining after all deductions are withheld from taxes, insurances, union dues and other items is referred to as a person's __________ income. a. disposable b. discretionary c. current d. real

a. disposable

A monthly health insurance premium would be an example of a(n) _______ a. fixed expenses b. variable expenses c. long-term expenses d. investment expenses

a. fixed expenses

Which of the following is the term used for employee-paid, employer- sponsored accounts for medical and dependent care which are paid with pre-tax dollars? a. flexible spending accounts b. bonus accounts c. employee benefits d. fringe benefits

a. flexible spending accounts

Eliza, a financial counselor has found herself in a conflict situation with clients. Which of the following is the preferred situation for her to be in during the conflict? a. participant observer b. the vise c. caught in the middle d. multiple attack

a. participant observer

Which of the following types of financial counseling is best when the financial counselor is attempting to help clients with a lot of debt to understand their present situation and learn ways to resolve it? a. remedial b. elective c. directive d. productive

a. remedial

Jim has come to you because of his impulsive spending habits. He has bounced three checks and has credit card debt approaching $11,000. As he enters the Counseling relationship, he tells you that he has more bills than he has money. Your best approach to counseling him is to use a ______. a. remedial approach b. eclectic approach c. productive approach d. preventative approach

a. remedial approach

Anya has written out the following strategies accomplishing her goals. Which one has all of the requirements for a well stared strategy. a. I will decrease my debt and save b. For 3 months I will out only once a week to save money that can then be applied to my credit card debt. c. I will put 10% of my take-home pay on a money order, take the money order to the mortgage company and put some of it as extra on my payment, and go to any other businesses where I have debt to put extra until the 10% is gone. d. I will have my roommate reduce the amount of electricity he is using.

b. For 3 months I will out only once a week to save money that can then be applied to my credit card debt.

Which of the following includes all the criteria for an effective goal? a. Get a raise by December 31st and put the extra income into savings. b. Pay off my auto loan early by adding $50 extra each month to the payment. c. have a good retirement. d. stop using my credit cards.

b. Pay off my auto loan early by adding $50 extra each month to the payment

Which of the following is NOT one of the six stages of the financial counseling model? a. Building a relationship b. Processing and analyzing information c. Generating alternatives d. Implementing the plan

b. Processing and analyzing information

Which of the following learning styles is best identified with the statement, "She never listens to me"? a. kinesthetic b. auditory c. visual d. none

b. auditory

During a remedial counseling, the responsibility for providing a systematic means of resolving a problem belongs to the ________. a. client b. counselor c. counselor & client d. either the counselor or client

b. counselor

Divide annual debt repayments by gross income to arrive at the _____ a. asset-to-debt ratio b. debt-to-income ratio c. net worth ratio d. liquidity ratio

b. debt-to-income ratio

A financial counselor's ability to help others help themselves is called _____ a. professionalism b. facilitation c. sensitivity d. commitment

b. facilitation

Carlos, a financial counselor, is talking to his client, Amy. When Carols suggests that Amy might eat out less to reduce her expenses, Amy says she could probably do that. As she says that, she sits up straighter, folds her arms, and her eyebrows come together. Which of the following does Carlos need to address at this time? a. verbal clues b. nonverbal clues c. the spacing between them d. Amy's tone

b. nonverbal clues

Which of the following happens when a counselor repeats what the client said adding emphasis on specific information? a. verbal pacing b. restating c. paraphrasing d. summarizing

b. restating

Income exempt from current taxation but for which taxes will likely be paid at a later date is said to be ______. a. tax-free b. tax-sheltered c. after-tax income d. tax-exempt

b. tax-sheltered

Most financial planning experts recommend that people have a liquidity ratio of at least _________ a. .5 b. 1.0 c. 3.0 d. 8.0

c. 3.0

Which of the following statements is a rule of brainstorming? a. Clarify all ideas b. Censor all ideas c. Use other people's ideas d. Assign names to ideas

c. Use other people's ideas

If Annie wanted to know where her money came from and where it went over the course of the past month or year, she would compile a ______ . a. balance sheet. b. net worth statement. c. cash flow statement. d. budget.

c. cash flow statement

A budget should be based on ______ a. previous spending b. current economic trends c. goals d. met worth

c. goals

Of the following, which is the best indicator of where the economy is headed over the next year of so? a. Real inflation rate b. gross domestic product c. index of leading economic indicators d. federal funds rate

c. index of leading economic indicator

Divide monthly living expenses into monetary (liquid) assets to arrive at the ________ a. solvency ratio b. debt-to-income ratio c. liquidity ratio d. assets-to-debt ratio

c. liquidity ratio

A financial counselor who demonstrates an awareness of his or her client's feelings, attitudes, and beliefs is displaying ____ a. privacy b. openness c. sensitivity d. professionalism

c. sensitivity

Closure is a logical consequence after which of the following? a. The client has saved enough for retirement b. The client has started working on his or her action plan c. The client believes he or she can use the same process on his or her own that was used in counseling d. The counselor believes the client is ready

c. the client believes that he or she can use the same process on his or her own that was used in counseling

How long would it take an investment of $6,000 at 9% interest to double? *Hint, use Rule 72. a. 2 years b. 4 years c. 6 years d. 8 years

d. 8 years

In which of the stages of counseling are goals and strategies reevaluated? a. Initiating b. Exploring c. Understanding d. Acting

d. Acting

Manuel has just finished a counseling session. Which of the following is one role of a counselor at this point into the Acting Stage? a. Build rapport with the client b. Help the client evaluate the possible strategies to determine the best option c. Assist the client in setting measurable goals d. Check in with the client Later to monitor progress towards goals

d. Check in with the client Later to monitor progress towards goals

Which of the following is NOT one of the four stages of counseling? a. Initiating. b. Exploring. c. Acting. d. Evaluating.

d. Evaluating

Which of the following is true about financial counseling? a. Results are not measurable b. The only aspect of importance is psychological c. There is only one solution to the problem d. It is expected that behavioral changes will result

d. It is expected that behavioral changes will result

What is a goal of shifting responsibility? a. To have the client rely on the counselor b. To have the client and counselor be co-dependent c. To have the counselor rely on the d. To have the client make better decisions after counseling terminates

d. To have the client make better decisions after counseling terminates

Connor has chosen a high-deductible health insurance program through his employer. He tends to not use much in any given year. Which of the following would most help with medical expenses he does have? a. a cafeteria plan b. a flexible savings account c. a health maintenance organization d. a health savings account

d. a health savings plan

Which of the following is more likely to create a welcoming and private space for clients? a. an open room with a lot of windows near the receptionist's desk b. a room with bright color and a large rectangular table down a long hallway c. an office with metal chairs of different sizes and counter space for working that is located up two flights of stairs d. a room with a round table and earth tone paint that is a little ways off from the main entrance

d. a room with a round table and earth tone paint that is a little ways off from the main entrance

The government's most commonly cited measure of the cost of living in Americans is the _________. a. production cost index. b. index of leading economic indicators. c. gross domestic product. d. consumer price index.

d. consumer price index

Which of the following learning styles is correctly matched with its "common" keyword? a. auditory - seeing b. visual - doing c. kinesthetic - seeing d. kinesthetic - doing

d. kinesthetic - doing

Which of the following questions is effective at getting to a client's deeper feelings about the information being discussed? a. multiple choice questions. b. dilemma questions. c. level I probes. d. level II probes.

d. level II probes

Herman and Martha, a 38-year-old couple with two elementary school-age boys, have come for counseling. The boys are looking forward to college. Herman and Martha feel obligated to contribute to the boy's college and realize the financial difficulties of doing this while maintaining their current live style. They are searching for solutions to their dilemma. As a financial counselor, the best approach to this situation is through which of the following types of counseling? a. remedial b. directive c. productive d. preventive

d. preventive

The statistic that measures the value of all goods and services produced by workers and capital located in the United States is the ______. a. index of leading economic indicators b. gross domestic product c. economic growth rate d. consumer price index

gross domestic product

Madu is working on a monthly budget. Which of the following is a useful tool to help him balance out the variations in income and expenditures from month to month? a. credit control b. subordinate budget c. revolving savings fund d. goal worksheet

revolving savings fund