CRPC Practice Exam 2 Latest Updated 2024 With Complete Solutions

CRPC Practice Exam 2 Latest Updated 2024 With Complete Solutions

which statement regarding the uses of life insurance in estate planning is false? - life
insurance benefits will always be in that person's taxable estate if the deceased is the
person insured
duty of care - lacking the competency to provide advice in the best interest of the client falls
under this
important area of concern addressed in the Dodd-Frank wall street reform act - systemic
risk
fiduciary standard - is considered a higher standard than the suitability standard
regarding disclosure - research has shown that disclosure disclaimers are generally
ineffective in alerting investors to the potential costs of conflict of interest
estimated annual cost of conflicted advice according to the 2015 white house report - 1.0%
prudent investing - requires that fiduciaries must diversify client investments
which of the following parties providing guidance and advice to a company-sponsored
retirement plan would be considered a fiduciary under ERISA section 404c - all - investment
manager, plan trustee, plan administrator
Which of the following are examples of the second step of the retirement planning process?
- I, III, and IV
I prioritize goals
III examine a person's tax situation
IV determine important time horizons
Which of the following personal expenses are likely to decrease following an individual's
retirement? - II and IV
II education
IV income taxes
not travel, utilities, and home repairs
Which of the following are correct statements about the capital utilization strategy? - I, II, III,
and IV
I it produces an annual retirement income over a finite number of years
II assuming the yield remains the same, the larger the retirement income that is paid, the
shorter the number of years over which it will be paid
III when the capital utilization approach is used, the planner must be careful in making
assumptions about the life expectancy of the client
IV the effect of taxes on retirement savings and distributions should be considered when the
before-tax approach is used to calculate the future value of retirement assets
Which one of the following is not a key element of an investment policy? - names of stocks to
be in the portfolio
essential elements of an investment policy: GRASP (Goals, Risk, Asset Allocation,
Strategies/Suitable Investment, Periodic Review)
Which one of the following is a characteristic of TIPS - the increase in principal is taxable
each year
also, maturities up to 30 years
your client owns a bond fund with a duration of 6.5. If interest rates increase 1.5% what is
the expected change in price for this fund? - 9.75% decrease
1.5% * -6.5% = -9.75%
Recall that duration needs to have a negative sign in order to represent the inverse
relationship between bond prices and interest rates. In this case, an increase in rates
means the bonds will fall in price. Therefore, this fund will decrease in price about 9.75%.
Also, you can remember that bond prices move opposite of interest rates. An increase in
interest rates means the price of bonds will go down.
the process of rebalancing is a key factor in - strategic asset allocation
Mark, a financial adviser, has a client who has worked in two positions during his lifetime.
The client's first position was a state or local government position that was not covered by
SS. The client is receiving a pension from that employment. His second position was covered
by SS and he is eligible for SS retirement benefits. Mark should advise his client that - his
eligibility for SS retirement benefits may be reduced due to the windfall elimination provision
(WEP)
the government pension offset provision (GPO) impacts SS benefits owed to spouses, exspouses, or to survivor benefits
Assume your client has a 5% bond, par value of $1,000, and 15 years to maturity.
Comparable bonds are yielding 6%. What is the value of this bond? - $902
if the calc is set to 1 P/YR, then all factors, other than FV, need to be adjusted for
semiannual payments. The keystrokes would be FV = 1000
PMT = 25
I/YR = 3
N = 30
then PV = -902