CRPC COMPLETE EXAMINATION TEST
QUESTIONS WITH VERIFIED SOLUTIONS
●● 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
Answer: 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.
●● 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?
Answer: $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.
,●● 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?
Answer: $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.
●● All of the following are considered foundation financial goals except
Answer: 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.
●● Which one of the following is an incorrect statement regarding
retirement spending habits?
Answer: automobile-related costs increase
Automobile costs often decrease. Second cars for married couples are
less necessary, and commuting miles are reduced or eliminated for the
,primary vehicle. Eliminating the second car reduces insurance expenses,
license fees, maintenance costs, and taxes.
●● You have completed all of the activities involved in the data
gathering step of the financial planning process, including obtaining
sufficient quantitative information and documents. What is the next step
of the process?
Answer: analyzing and evaluating the client's information
Once you have gathered all of the appropriate data needed, the next step
is to analyze it.
●● It is anticipated that the percentage of people who continue to work
after they reach age 65 or 66 will increase in the future. All of the
following are reasons for this increase except
Answer: almost all categories of living expenses increase during
retirement years.
With some exceptions, most categories of living expenses (such as
transportation, clothing, and housing) decrease during retirement years.
Some expenses, such as travel and medical, may increase during
retirement years. It is true that Social Security benefits may increase for
people who work past their Social Security full retirement age.
Additionally, wages and salaries earned during retirement will obviously
increase retirement income and longer life spans will result in a need for
more retirement income.
, ●● When a client's funds are insufficient to attain retirement goals, it is
appropriate for the planner to suggest all of the following except
Answer: increasing gifts to children.
Increasing gifts to children would exacerbate the problem. If client
retirement funds are insufficient to meet goals, gifts to children should
decrease. All other options will increase available resources. Delaying
retirement will also decrease the need for retirement income.
●● To calculate retirement needs, planners must make assumptions
regarding future trends. These assumptions include all of the following
except
Answer: political events.
Although political events have effects on investment returns and
inflation, it is nearly impossible to consistently predict events of such a
random nature. Investment returns, inflation rates, and tax rates must be
assumed when projecting retirement income needs.
●● During retirement, John wants to receive $50,000 at the end of each
year for the rest of his life. To calculate the amount that he will need to
save, you need to solve for
Answer: ordinary annuity-set calculator at end.
QUESTIONS WITH VERIFIED SOLUTIONS
●● 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
Answer: 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.
●● 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?
Answer: $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.
,●● 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?
Answer: $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.
●● All of the following are considered foundation financial goals except
Answer: 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.
●● Which one of the following is an incorrect statement regarding
retirement spending habits?
Answer: automobile-related costs increase
Automobile costs often decrease. Second cars for married couples are
less necessary, and commuting miles are reduced or eliminated for the
,primary vehicle. Eliminating the second car reduces insurance expenses,
license fees, maintenance costs, and taxes.
●● You have completed all of the activities involved in the data
gathering step of the financial planning process, including obtaining
sufficient quantitative information and documents. What is the next step
of the process?
Answer: analyzing and evaluating the client's information
Once you have gathered all of the appropriate data needed, the next step
is to analyze it.
●● It is anticipated that the percentage of people who continue to work
after they reach age 65 or 66 will increase in the future. All of the
following are reasons for this increase except
Answer: almost all categories of living expenses increase during
retirement years.
With some exceptions, most categories of living expenses (such as
transportation, clothing, and housing) decrease during retirement years.
Some expenses, such as travel and medical, may increase during
retirement years. It is true that Social Security benefits may increase for
people who work past their Social Security full retirement age.
Additionally, wages and salaries earned during retirement will obviously
increase retirement income and longer life spans will result in a need for
more retirement income.
, ●● When a client's funds are insufficient to attain retirement goals, it is
appropriate for the planner to suggest all of the following except
Answer: increasing gifts to children.
Increasing gifts to children would exacerbate the problem. If client
retirement funds are insufficient to meet goals, gifts to children should
decrease. All other options will increase available resources. Delaying
retirement will also decrease the need for retirement income.
●● To calculate retirement needs, planners must make assumptions
regarding future trends. These assumptions include all of the following
except
Answer: political events.
Although political events have effects on investment returns and
inflation, it is nearly impossible to consistently predict events of such a
random nature. Investment returns, inflation rates, and tax rates must be
assumed when projecting retirement income needs.
●● During retirement, John wants to receive $50,000 at the end of each
year for the rest of his life. To calculate the amount that he will need to
save, you need to solve for
Answer: ordinary annuity-set calculator at end.
