FPQP Exam (Module 3) Questions With
100% Correct Answers 2026-2027
Updated.
When making rate of return assumptions for a client's goal, a planner should use
A) a rate of return specified by the client.
B) a conservative rate of return.
C) current market rates.
D) an aggressive rate of return to achieve the goal more easily. - Answer B) a conservative rate
of return.
Explanation:
Because levels of return can fluctuate widely, planners should be somewhat more conservative
with the inflation rates and rates of return assumed during goal forecasting. It is better for
clients to get surprises on the upside rather than on the downside.
LO 3-7
What effect does an assumption, regarding the rate of return, have on achieving a goal?
A) An assumption of a low rate of return will make it possible to achieve a particular goal.
B) An assumption of a low rate of return may result in needing fewer years to achieve a
particular goal.
C) An assumption of a high rate of return may result in fewer dollars being invested to achieve a
particular goal.
D) An assumption of a high rate of return will allow greater flexibility in achieving a particular
goal. - Answer C) An assumption of a high rate of return may result in fewer dollars being
invested to achieve a particular goal.
Explanation:
An assumption of a high rate of return may indeed result in fewer dollars being invested to
achieve a particular goal because the high return means that fewer dollars will need to be
invested.
LO 3-7
All other relevant variables being equal, which of the following statements is CORRECT?
A) The present value of an ordinary annuity will be greater than the present value of an annuity
due.
B) As the number of compounding periods within a set time (such as five years) increases, the
future value of an annuity due decreases.
, C) The future value of an annuity due will be greater than the future value of an ordinary
annuity.
D) The lesser the compound rate, the larger the future value. - Answer C) The future value of
an annuity due will be greater than the future value of an ordinary annuity.
Explanation:
The future value of an annuity due will be greater than the future value of an ordinary annuity
because with an annuity due, the money is invested earlier (at the beginning of the period
rather than at the end of the period).
LO 3-7
Steve invested $10,000 in a growth mutual fund five years ago. He earned an average annual
return of 9.5% on the fund during that period. How much is his fund worth now?
A) $14,377
B) $15,905
C) $15,742
D) $16,105 - Answer C) $15,742
Explanation:
1 P/YR, end mode, C ALL. 10000 +/- PV, 9.5 I/YR, 5, downshift, N (5 compounding periods), solve
for FV = $15,742.39.
LO 3-2
Mary wants to accumulate $100,000 in 12 years. She believes she can earn 7%, compounded
annually, on her money. How much does she need to invest today to achieve her goal?
A) $39,711
B) $47,509
C) $44,401
D) $43,796 - Answer C) $44,401
Explanation:
1 P/YR, end mode, C ALL. 100000 FV, 7 I/YR, 12, downshift, N (12 compounding periods), solve
for PV = $44,401.20.
LO 3-3
Rhonda invested $5,000 in a mutual fund 15 years ago. It is now worth $25,250. What average
annual rate of return did Rhonda earn on this investment?
A) 10.05%
100% Correct Answers 2026-2027
Updated.
When making rate of return assumptions for a client's goal, a planner should use
A) a rate of return specified by the client.
B) a conservative rate of return.
C) current market rates.
D) an aggressive rate of return to achieve the goal more easily. - Answer B) a conservative rate
of return.
Explanation:
Because levels of return can fluctuate widely, planners should be somewhat more conservative
with the inflation rates and rates of return assumed during goal forecasting. It is better for
clients to get surprises on the upside rather than on the downside.
LO 3-7
What effect does an assumption, regarding the rate of return, have on achieving a goal?
A) An assumption of a low rate of return will make it possible to achieve a particular goal.
B) An assumption of a low rate of return may result in needing fewer years to achieve a
particular goal.
C) An assumption of a high rate of return may result in fewer dollars being invested to achieve a
particular goal.
D) An assumption of a high rate of return will allow greater flexibility in achieving a particular
goal. - Answer C) An assumption of a high rate of return may result in fewer dollars being
invested to achieve a particular goal.
Explanation:
An assumption of a high rate of return may indeed result in fewer dollars being invested to
achieve a particular goal because the high return means that fewer dollars will need to be
invested.
LO 3-7
All other relevant variables being equal, which of the following statements is CORRECT?
A) The present value of an ordinary annuity will be greater than the present value of an annuity
due.
B) As the number of compounding periods within a set time (such as five years) increases, the
future value of an annuity due decreases.
, C) The future value of an annuity due will be greater than the future value of an ordinary
annuity.
D) The lesser the compound rate, the larger the future value. - Answer C) The future value of
an annuity due will be greater than the future value of an ordinary annuity.
Explanation:
The future value of an annuity due will be greater than the future value of an ordinary annuity
because with an annuity due, the money is invested earlier (at the beginning of the period
rather than at the end of the period).
LO 3-7
Steve invested $10,000 in a growth mutual fund five years ago. He earned an average annual
return of 9.5% on the fund during that period. How much is his fund worth now?
A) $14,377
B) $15,905
C) $15,742
D) $16,105 - Answer C) $15,742
Explanation:
1 P/YR, end mode, C ALL. 10000 +/- PV, 9.5 I/YR, 5, downshift, N (5 compounding periods), solve
for FV = $15,742.39.
LO 3-2
Mary wants to accumulate $100,000 in 12 years. She believes she can earn 7%, compounded
annually, on her money. How much does she need to invest today to achieve her goal?
A) $39,711
B) $47,509
C) $44,401
D) $43,796 - Answer C) $44,401
Explanation:
1 P/YR, end mode, C ALL. 100000 FV, 7 I/YR, 12, downshift, N (12 compounding periods), solve
for PV = $44,401.20.
LO 3-3
Rhonda invested $5,000 in a mutual fund 15 years ago. It is now worth $25,250. What average
annual rate of return did Rhonda earn on this investment?
A) 10.05%
