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More Exam Writing Skills - Post #18 - FPSC Level 1 Examination - December 2017

Posted by John Gobeil on

In this Post, we will consider exam writing skills by looking at time management, calculators, formulas, rates and examination rules.                          

Time Management

The Guide to CFP Examinations published by the FPSC says:

“FPE1 is a competency-based examination of up to four hours in duration. The examination consists of approximately 95 multiple-choice questions. The examination questions will be presented as a combination of stand-alone multiple-choice questions and two case studies with related multiple-choice questions.”

“Candidates must select the most appropriate or best answer from the options provided for the scenario presented in the question. There is only one correct answer for each question, and marks are not deducted for incorrect responses. Each question is worth one point toward the total examination mark.”

“FPE1 is written electronically at computer-based testing facilities. Although FPE1 will be administered on a computer, candidates will be provided with a paper version of the case study scenarios.”

The last offering of the FPE1 examination was four hours in duration and there were a total of 93 multiple-choice questions. There were 73 stand-alone technical questions and two case studies each with 10 questions.

Each question is worth one point toward the total examination mark. However, you require twice as much time to answer a case study question as a technical question.

Technical questions or case questions first?

There is some debate as to whether to answer the technical questions or the case questions first.

You could do the technical questions first to get a quick sense of accomplishment. Then, you would take a deep breath, adjust your pace and start on the case studies.

However, we would answer the case studies first. The case studies are more challenging to your brain than the technical questions.  If you were to leave the case questions to noon, you would be doing them when you are getting tired. Doing the case questions first should be better.

Strategy

On the last FPE1, the time for a technical question would have been 2.12 minutes, calculated as (240 minutes divided by (73 technical questions + (2 × 20 case study questions))). The time for a case study question would have been 4.24 minutes, calculated as (2 × time for a technical question of 2.12 minutes).

Using the above calculation, determine the number of minutes that you can spend on each technical question.

When you first sit down at the FPE1, write on your exam paper the times at which you should have completed each case study and each block of 10 technical questions. 

Suppose that the FPE1 has the same number of questions as on the last exam: 73 technical questions, 10 questions for the first case study and 10 for the second. Suppose also that you are going to answer the case study questions first.

At the end of question 10 for the first case study, write 9:42 am in large red letters. At 9:42 am, you should have completed the 10 questions for the first case study in 42.4 minutes, calculated as (10 questions × 4.24 minutes per question).

At the end of question 10 for the second case study, write 10:24 am in large red letters. At 10:24 am, you should have completed the 10 questions for the second case study in 42.4 minutes, calculated as (10 questions × 4.24 minutes per question).

Now you should do the technical questions at the rate of 10 questions in every 21.2 minutes, calculated as (10 questions × 2.12 minutes per question).

At the end of the 10th technical question, write 10:45 am in large red letters. At 10:45 am, you should have completed the first 10 technical questions in 21.2 minutes, calculated as (10 questions × 2.12 minutes per question).

At the end of the 20th technical question, write 11:06 am in large red letters. At 11:06 am, you should have completed the second group of 10 technical questions in 21.2 minutes, calculated as (10 questions × 2.1 minutes per question).

As you finish answering the 73rd technical question, it should be 1:00 pm and they will blow the whistle.

FPSC approved calculator policy

The FPSC has identified the only acceptable models of calculators as the Hewlett Packard HP10B, HP10BII and HP10bII+, the Casio FC-200V, the Sharp EL-733 A, EL-738 and EL-738-C, and the Texas Instruments TI BAII, TI BAII+ and TI BA II Plus Professional.

We strongly recommend the Hewlett Packard HP10BII and HP10bII+.

Years and tax rates on the FPE1 Examination

A candidate asked, “For the FPE1, should we use the income tax and other rates for the previous year or for the current year?”

If you get a question that involves a future action, the appropriate rates would obviously not be last year’s. If a question involves completing someone’s income tax return for the previous year, the appropriate rates would obviously be last year’s. It should be obvious from the question as to what rates you should use.

Formulae provided on the FPE1 Examination

The FPSC provides a page with the Exam that includes eight formulae. The first seven are the time value of money calculations programmed into your calculator. The eight is the real rate of return. They should save the paper. The first seven are of no value and the eight is one that everyone better know.

We are continually asked about the calculations required on the Exam. “I am just wondering about the different ratio calculations, such as current ratio, quick ratio, etc.

Would we be provided with the formula on the different ratios on the exam?”

You should focus on the essentials of financial planning and these do not include calculating financial ratios. You can divide any two numbers on a set of financial statements and come up with a ratio.

If you cannot tell how to calculate a ratio from the name of the thing (e.g., earnings per share or dividends per share), forget it.

They are more likely to ask you to determine what a ratio might indicate about the common shares of a corporation, rather than having you calculate it. However, this exam is not about calculating a bunch of stuff as you were required to do on the qualifying courses. You are unlikely to see a question on ratios and very, very unlikely to see two.

You are extremely likely to see calculations of the principal residence exemption, the capital gains exemption for shares of a qualifying small business corporation, the contribution room to an RRSP or TFSA, and other important amounts.

If you understand the concepts, you will be able to recall the calculations without having memorized them. You will have trouble memorizing calculations to obtain a pass.

Guide to Examinations for CFP Certification

A couple of candidates who are repeating the exam said that they were not allowed to use the washrooms. If you want to pass, you had better know what you can and cannot do.

They recently changed the Examination Day Regulations. You should read all of the Regulations in The Guide to Examinations for CFP® Certification.

“If you feel ill or have to use the restroom, notify the invigilator, who will accompany you to the appropriate facility. You will not be granted additional time for time out of the room.”

“Food or medications required during the examination are considered special needs, and permission must first be granted by FPSC under the “Candidates with Special Needs” policy prior to the examination.”

You should know your rights under the Regulations.

John Gobeil, BSc, CFP®
David Gobeil, CPA, CA, CFP®

Certified Financial Planner® and CFP® are certification marks owned outside the U.S. by the Financial Planning Standards Board Ltd. The Financial Planners Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.


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