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Financial Reasoning II

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Every organization has specific requirements during its hiring process. Many financial professions require their candidate to complete a series of aptitude tests before moving onto the next step. One such test is the financial reasoning aptitude test, which is designed to assess you on various skills. The financial reasoning test assesses your mathematical skills, analysis, critical thinking, and problem-solving.

How to Prepare for a Financial Reasoning Aptitude Test



Every organization has specific requirements during its hiring process. Many financial professions require their candidate to complete a series of aptitude tests before moving on to the next step. One such test is the financial reasoning aptitude test, which is designed to assess you on various skills. The financial reasoning test assesses your mathematical skills, analysis, critical thinking, and problem-solving.

Most financial reasoning aptitude tests are timed, ranging from 4 to 6 minutes per question, with 10 questions or more. Typically, calculators are allowed, but you want to have paper and a pencil on hand if needed. Employers want to determine that you can keep calm under pressure and work quickly against the clock. Most workplaces administer financial reasoning tests online, but some may have you visit a training center to take your test.



What is a Financial Reasoning Aptitude Test?



A financial reasoning aptitude test is designed to assess mathematical skills that are used in financial industries. This test measures your ability to understand large quantities of numerical information and solve problems quickly. Financial reasoning tests are very similar to numerical reasoning tests. Financial information will be presented to you through tables, graphs, and text, and you are required to demonstrate knowledge of basic arithmetic and financial terminology. Questions you will find include addition, subtraction, multiplication, division, percentages, ratios, averages, and interest. Here are some examples of questions that are found on financial reasoning tests:



1. The above graph represents the sales of coats, bags, and shoes from an online store. How many more shoes were sold in March than coats in the same month?

a. 400

b. 200

c. 100

d. 300

Correct answer: a

Explanation: Take the number of shoes sold in March (500) and subtract the number of coats sold in March (100) to find the correct answer.

Number of shoes sold in March = 500

Number of coats sold in March = 100

Number of shoes sold in March minus the number of coats = 500 – 100 = 400

2. The business owner of the online store expects the sale of bags to increase 30% from March to April. If the projection is correct, how many bags will the store sell in April?

a. 230

b. 260

c. 320

d. 460

Correct answer: b

Explanation: First, you will determine what 30% is of 200 and add that number to the number of bags sold in March (200). Percentages are a fraction of a number out of 100%. For example, 30% represents 30 out of 100. To determine a 30% increase, you will make 30% into a decimal, or .30, which denotes 30 out of 100. Multiple .30 times the number of bags sold in March (200) to determine the increase in the number of shoes. (.30 x 200 = 60 shoes) Take the number of shoes sold in March (200) and add it to the 30% increase (60) to determine the number of shoes sold in April. 200 + 60 = 260

3. Which of the following describes net income?

a. a company's profit before expenses are paid

b. a company's profit before depreciation

c. a company's profit after all expenses are deducted from revenues

d. a company's profit after subtracting the costs of producing and distributing products

Correct answer: c

Explanation: Net income is defined as a company's profits after all expenses are deducted from revenues. Net income is not a company's profit before expenses are paid or depreciation is calculated. After subtracting the costs of producing and distributing products, a company's profit is gross profit or gross income.

4. Your supervisor asks you to calculate the amount of simple interest a client has paid on a loan for the past five years. What is simple interest?

a. the rate of interest that a bank does for charging its customers

b. the interest rate given by banks to customers with a good credit history

c. an interest rate that fluctuates with time

d. a fixed rate that is tied to a loan or line of credit

Correct answer: a

Explanation: Simple interest is defined as the rate of interest that a bank charges its customers. The prime rate is the interest rate given by banks to customers with a good credit history or favored customers, and a variable interest rate is an interest rate that fluctuates with time. Fixed interest is a fixed rate that is tied to a loan or line of credit.

5. A FICO score is based on several factors, including the length of an individual's credit history, the total amount of debt owed, and payment history. What is the range of FICO scores?

a. 620 to 850

b. 500 to 920

c. 300 to 850

d. 400 to 700

Correct answer: c

Explanation: FICO scores range from 300 to 850. The higher the score, the better terms an individual may receive on a loan or credit card. People with FICO scores below 620 may have a more challenging time securing credit or a less favorable interest rate if a credit card or loan is approved.



Why do Companies Administer Financial Reasoning Aptitude Tests?



Companies that administer financial reasoning aptitude tests do so to evaluate how well you can solve mathematical problems involving financial information. This test not only measures your mathematical and reasoning skills but shows the hiring manager how you follow directions and timelines and demonstrates your reading comprehension. Companies in the accounting and financial management industries use financial reasoning aptitude tests to narrow their candidate pool and find the most qualified person to hire. By requiring a financial reasoning test for employment, companies can ensure that everyone they invite for an interview has the skills needed for a particular role in their company.



What Type of Jobs May Require Candidates to Take a Financial Reasoning Aptitude Test?



Industries that might benefit from a financial reasoning aptitude test include:





Common Questions About Financial Reasoning Aptitude Tests.



Here are some common questions you might have about the financial reasoning aptitude test:

How quickly do I receive the results of my test?

Every company is different. Some may notify you of your results within two to four weeks, and others may not inform you of your results. Some organizations will not give you your score but tell you that you passed if you receive an invitation for an interview.

At what stage in the hiring process is the financial reasoning aptitude test given?

After submitting your application and resume, the hiring manager will schedule a financial reasoning aptitude test and may also schedule an error checking test. Upon successful completion of the test, you will be invited to a telephone or in-person interview.

What is a passing score on the financial reasoning aptitude test?

With most companies, a minimum acceptable passing score is 80%. However, the higher score you receive will place you higher on the candidacy list, so you want to achieve as high a score as possible. How do I prepare for the financial reasoning aptitude test? The first step is to take the Mock Questions financial reasoning aptitude practice test. In addition to taking this test, the best way to prepare is to review financial terminology and practice taking other online financial reasoning tests.

Some companies will offer a testing packet with sample questions. If a company provides a testing packet, study the packet before taking the analytical reasoning aptitude test. It is also recommended timing yourself while taking the practice exams to get an idea of how long it will take you to answer each question.

What do I do if I do not know the answer to a question?

If you do not know the answer to a question, skip over it and move on to the next question. Since the test is timed, you want to answer as many questions as possible. It is not recommended to leave any questions blank, so after you complete the test, go back to the unanswered questions and choose the answer you believe to be most accurate.

If the questions on the test are based on basic mathematical knowledge, do I need to study?

The questions are based on basic mathematical knowledge, but it is recommended that you study for the exam if you want to achieve a high score. Those who spend time familiarizing themselves with the content on the test and the imposed time limits tend to feel more confident on the day of the test and have a better chance of achieving the highest possible score.



Helpful Advice for Candidates Preparing for the Financial Reasoning Aptitude Test.



In addition to studying the materials and taking Mock Questions practice tests, here is some more advice to candidates preparing for the financial reasoning aptitude test:





After completing the Financial Reasoning Aptitude practice test, check out the other aptitude tests that Mock Questions offers here.

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