During a financial planning review, a client mentions their Net Worth has decreased by 15% over the past year. Which of the following scenarios is LEAST likely to be the primary cause of this decline?

Question: During a financial planning review, a client mentions their Net Worth has decreased by 15% over the past year. Which of the following scenarios is LEAST likely to be the primary cause of this decline?

Answer options:

• A significant market downturn affecting their investment portfolio.
• The purchase of a new car using a substantial amount of cash from savings.
• Increased consumer debt (e.g., credit card balances) without a proportional increase in assets. ✅ A substantial increase in their home's appraised value while mortgage debt remained constant.

Correct answer: A substantial increase in their home's appraised value while mortgage debt remained constant.

Explanation: Net Worth is Assets minus Liabilities. A substantial increase in home value (an asset) while mortgage debt (a liability) remains constant would increase, not decrease, Net Worth. The other options directly lead to a decrease in Net Worth.