Open Credit
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
- Define open credit.
- Explain for whom open credit may be suitable.
- Calculate the terms of an open credit facility.
- Explain that administration costs may be associated with prepayment of open credit.
- Explain the prepayment costs / penalties that may be associated with prepayments of open credit, such as:
- Administration costs
- Determine how each of these factors may impact the suitability of open credit:
- Purpose of credit or borrowed funds
- Cost, including interest and fees
- Impact on cash flow
- Payment options (schedule, amounts, options)
- Expected prepayments
- Expected lifetime of collateral (if applicable)
- Closure requirements / costs
- Tax impact
- Evaluate how each of the factors may impact the suitability of open credit.
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Define open credit.
- Explain for whom open credit may be suitable.
- Calculate the terms of an open credit facility.
- Explain that administration costs may be associated with prepayment of open credit.
- Explain the prepayment costs / penalties that may be associated with prepayments of open credit, such as:
- Administration costs
- Determine how each of these factors may impact the suitability of open credit:
- Purpose of credit or borrowed funds
- Cost, including interest and fees
- Impact on cash flow
- Payment options (schedule, amounts, options)
- Expected prepayments
- Expected lifetime of collateral (if applicable)
- Closure requirements / costs
- Tax impact
- Evaluate how each of the factors may impact the suitability of open credit.
previous / Secured Credit