CRPC PRACTICE EXAM 1 2026 COMPLETE
QUESTIONS AND VERIFIED ANSWERS GRADED
A+
◉ If Tom and Jenny want to save a fixed amount annually to
accumulate $2 million by their retirement date in 25 years (rather
than an amount that grows with inflation each year), what level
annual end of year savings amount will they need to deposit each
year, assuming their savings earn 7% annually? Answer: "END"
mode and "1 P/Yr".
FV = 2,000,000
I/YR = 7
N = 25
PV = 0
then PMT = $31,621
◉ Bill and Lisa Hahn have determined that they will need a monthly
income of $6,000 during retirement. They expect to receive SS
benefits amounting to $3,500 per month at the beginning of each
month. Over the 12 remaining years of their preretirement period,
they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to
assume a 6% annual after-tax investment return compounded
monthly. They want to start their monthly retirement withdrawals
on the first day they retire. What is the lump sum needed at the
,beginning of retirement to fund this income stream? Answer:
Monthly retirement income need is not specified as "today's dollars"
and no inflation rate specified; therefore, it must be assumed that
the $2,500 net monthly income need represents retirement dollars,
and the retirement period income stream is level. To calculate the
lump sum needed at the beginning of retirement, discount the
stream of monthly income payments at the investment return rate:
BEG mode and "12 P/Yr"
PMT = 2,500
SHIFT N = 25
I/YR = 6
FV = 0
then PV = $389,957
◉ Assume a client and investment professional have worked
together for 7 years, Recently, the client's personal and financial
circumstances have changed. According to the course materials,
what is the next asset management step that the investment
professional should take? Answer: gather data
◉ Which one of the following is not a key attribute of an investment
policy Answer: fluid
◉ All of these are examples of asset allocation strategies except
Answer: alpha
, ◉ When determining what provides the most diversification
Answer: the further away from +1, the more diversification
◉ The two major risks associated with individual common stocks
are Answer: market risk and business risk
◉ Risks associated with bonds: Answer: interest rate, default,
purchasing power
◉ What is the price of a bond with a 7% coupon, a $1,000 par value,
and a maturity of 20 years if the market interest rate for similar
bonds is 6%? Answer: Set the calculator for 2 P/Yr and END mode.
FV = 1000
PMT = 35
20 SHIFT N
I/YR = 6
and then PV = $1,115.57
35 is the semiannual payment of the bond. ($70/2)
◉ This year, your 63 year old client had $17,025 of earned income
and $30,000 of investment income. He was also drawing SS benefits.
QUESTIONS AND VERIFIED ANSWERS GRADED
A+
◉ If Tom and Jenny want to save a fixed amount annually to
accumulate $2 million by their retirement date in 25 years (rather
than an amount that grows with inflation each year), what level
annual end of year savings amount will they need to deposit each
year, assuming their savings earn 7% annually? Answer: "END"
mode and "1 P/Yr".
FV = 2,000,000
I/YR = 7
N = 25
PV = 0
then PMT = $31,621
◉ Bill and Lisa Hahn have determined that they will need a monthly
income of $6,000 during retirement. They expect to receive SS
benefits amounting to $3,500 per month at the beginning of each
month. Over the 12 remaining years of their preretirement period,
they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to
assume a 6% annual after-tax investment return compounded
monthly. They want to start their monthly retirement withdrawals
on the first day they retire. What is the lump sum needed at the
,beginning of retirement to fund this income stream? Answer:
Monthly retirement income need is not specified as "today's dollars"
and no inflation rate specified; therefore, it must be assumed that
the $2,500 net monthly income need represents retirement dollars,
and the retirement period income stream is level. To calculate the
lump sum needed at the beginning of retirement, discount the
stream of monthly income payments at the investment return rate:
BEG mode and "12 P/Yr"
PMT = 2,500
SHIFT N = 25
I/YR = 6
FV = 0
then PV = $389,957
◉ Assume a client and investment professional have worked
together for 7 years, Recently, the client's personal and financial
circumstances have changed. According to the course materials,
what is the next asset management step that the investment
professional should take? Answer: gather data
◉ Which one of the following is not a key attribute of an investment
policy Answer: fluid
◉ All of these are examples of asset allocation strategies except
Answer: alpha
, ◉ When determining what provides the most diversification
Answer: the further away from +1, the more diversification
◉ The two major risks associated with individual common stocks
are Answer: market risk and business risk
◉ Risks associated with bonds: Answer: interest rate, default,
purchasing power
◉ What is the price of a bond with a 7% coupon, a $1,000 par value,
and a maturity of 20 years if the market interest rate for similar
bonds is 6%? Answer: Set the calculator for 2 P/Yr and END mode.
FV = 1000
PMT = 35
20 SHIFT N
I/YR = 6
and then PV = $1,115.57
35 is the semiannual payment of the bond. ($70/2)
◉ This year, your 63 year old client had $17,025 of earned income
and $30,000 of investment income. He was also drawing SS benefits.
