CRPC Actual Exam Questions and
Answers
1."Prior to providing retirement planning services, the scope of
the services offered should be mutually defined by the planner
and client. This initial discussion should not include which one
of the following topics?
A) identifying the services to be provided.
B) disclosing the planner's compensation arrangements.
C) establishing the duration of the services and engagement.
D) identifying specific funds in which to invest."
Answer "D) identifying specific funds in which to invest.
Specific investments are not discussed until step four of the planning
process, when the planner develops and presents the retirement plan.
The initial meeting should include a discussion of the planner's
compensation arrangements so that the client can determine precisely
how the planner will be paid. Duration of the engagement and scope of
services provided should also be discussed."
2."The process of data gathering is the second step in the
,retirement planning process. All of the following are examples
of data to be gathered except
A) investment risk tolerance.
B) the client's ability to purchase health insurance.
C) the balances in retirement accounts.
D) income sources and amounts."
Answer "B) the client's ability to purchase health insurance.
The client's ability to purchase insurance or investments is reviewed in
step three of the planning process, in which an analysis and evaluation
of financial status takes place. During the data gathering process the
planner should identify the client's retirement account balances and
income sources and amounts, and determine his or her risk tolerance."
3."Frank and Brenda Elliot own $20,000 in cash equivalents,
$100,000 in invested assets, and $290,000 in use assets. The
Elliots have an outstanding mortgage of $150,000 and owe
$3,500 in credit card debt. What is the Elliots' net worth?
e
A) $236,500
B) $256,500
,C) $410,000
D) $260,000"
Answer "B) $256,500
Net worth is defined as assets minus liabilities. The Elliots have
$410,000 in assets and $153,500 in liabilities. Their net worth is
$256,500."
4."Andy and Lori Cookston had a combined gross salary of
$85,000 this year. Other cash inflows amounted to $9,800.
Their fixed cash outflows were
$26,300, and their variable cash outflows were $64,700.
What was the Cookstons' net cash flow for the year?
A) $6,000 deficit
B) $68,500
C) $30,100
D) $3,800"
Answer "D) $3,800
Net cash flow is calculated by subtracting total cash outflows from total
cash inflows. Total cash inflows of $94,800 minus total cash outflows of
$91,000 equals net cash flow of $3,800."
, 5."All of the following are considered foundation financial goals
EXCEPT
A) life, health, and automobile insurance.
B) food, clothing, and shelter.
C) helping grandchildren with college.
D) emergency funds."
Answer "C) helping grandchildren with college.
College funding is considered a lifestyle goal. Foundation goals are those
that
contribute to more basic living needs such as food, insurance, and
emergency funds. The coverage of risk exposures is also considered a
foundation financial goal."
6."Which one of the following is an incorrect statement
regarding retirement spending habits?
A) automobile-related costs increase
B) health costs increase
C) expenditures for retirement plan contributions cease
D) travel and recreation costs increase"
Answers
1."Prior to providing retirement planning services, the scope of
the services offered should be mutually defined by the planner
and client. This initial discussion should not include which one
of the following topics?
A) identifying the services to be provided.
B) disclosing the planner's compensation arrangements.
C) establishing the duration of the services and engagement.
D) identifying specific funds in which to invest."
Answer "D) identifying specific funds in which to invest.
Specific investments are not discussed until step four of the planning
process, when the planner develops and presents the retirement plan.
The initial meeting should include a discussion of the planner's
compensation arrangements so that the client can determine precisely
how the planner will be paid. Duration of the engagement and scope of
services provided should also be discussed."
2."The process of data gathering is the second step in the
,retirement planning process. All of the following are examples
of data to be gathered except
A) investment risk tolerance.
B) the client's ability to purchase health insurance.
C) the balances in retirement accounts.
D) income sources and amounts."
Answer "B) the client's ability to purchase health insurance.
The client's ability to purchase insurance or investments is reviewed in
step three of the planning process, in which an analysis and evaluation
of financial status takes place. During the data gathering process the
planner should identify the client's retirement account balances and
income sources and amounts, and determine his or her risk tolerance."
3."Frank and Brenda Elliot own $20,000 in cash equivalents,
$100,000 in invested assets, and $290,000 in use assets. The
Elliots have an outstanding mortgage of $150,000 and owe
$3,500 in credit card debt. What is the Elliots' net worth?
e
A) $236,500
B) $256,500
,C) $410,000
D) $260,000"
Answer "B) $256,500
Net worth is defined as assets minus liabilities. The Elliots have
$410,000 in assets and $153,500 in liabilities. Their net worth is
$256,500."
4."Andy and Lori Cookston had a combined gross salary of
$85,000 this year. Other cash inflows amounted to $9,800.
Their fixed cash outflows were
$26,300, and their variable cash outflows were $64,700.
What was the Cookstons' net cash flow for the year?
A) $6,000 deficit
B) $68,500
C) $30,100
D) $3,800"
Answer "D) $3,800
Net cash flow is calculated by subtracting total cash outflows from total
cash inflows. Total cash inflows of $94,800 minus total cash outflows of
$91,000 equals net cash flow of $3,800."
, 5."All of the following are considered foundation financial goals
EXCEPT
A) life, health, and automobile insurance.
B) food, clothing, and shelter.
C) helping grandchildren with college.
D) emergency funds."
Answer "C) helping grandchildren with college.
College funding is considered a lifestyle goal. Foundation goals are those
that
contribute to more basic living needs such as food, insurance, and
emergency funds. The coverage of risk exposures is also considered a
foundation financial goal."
6."Which one of the following is an incorrect statement
regarding retirement spending habits?
A) automobile-related costs increase
B) health costs increase
C) expenditures for retirement plan contributions cease
D) travel and recreation costs increase"
