CRPC EXAM ACTUAL EXAM 330 QUESTIONS AND CORRECT DETAILED ANSWERS 2024/25 UPDATE 100% CORRECT GRADED A+

1. The percentage change in price with a 1.5% rise in the market rate of interest for a bond with a duration of 5.0 years is - ANSWER duration x change in mkt int rate 1.5 x 5= -7.5 10 essential health benefits that must be covered by all health insurance policies under PPACA - ANSWER 1. out patient care 2. emergency services 3. hospitalization 4. maternity and newborn care 5. mental health and addiction treatment 6. prescription drugs 7. rehab services and devices 8. lab services 9. preventive services 10. pediatric service 10 factors that must be considered before annuity purchase reco - ANSWER 1) age 2) annual income 3) financial situation, experience, and objectives 4) intended use of annuity 5) financial horizon 6) existing assets (investments and insurance) 7) liquidity need 8) current liquid net worth 9) risk tolerance 10) tax status 10. Carla is collecting $600 per month from a government pension and is also receiving a Social Security spousal benefit of $500 per month. Due to the GPO, her Social Security spousal benefit will be reduced to ____________. - ANSWER Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400. $500 - $400 = $100. 10. Carla is collecting $600 per month from a government pension and is also receiving a Social Security spousal benefit of $500 per month. Due to the GPO, her Social Security spousal benefit will be reduced to ____________. - ANSWER Due to the GPO, her Social Security spousal benefit will be reduced by 2/3, or $400. $500 - $400 = $100. 11. David began receiving Social Security benefits in June 2015. He later learned that he should have delayed receipt of his benefits until a later age. He has until _______ to pay back all payments and refile for increase benefits at a future date. - ANSWER Claimants have 12 months from the date they filed their original claim to pay back all payments, and they can then refile for increased benefits at a later date. 11. David began receiving Social Security benefits in June 2015. He later learned that he should have delayed receipt of his benefits until a later age. He has until _______ to pay back all payments and refile for increase benefits at a future date. - ANSWER june 2016 Claimants have 12 months from the date they filed their original claim to pay back all payments, and they can then refile for increased benefits at a later date. 12. Which one of the following generally represents the basis of stock acquired by gift, if the fair market value on the date of gift is less than the donor's basis? - ANSWER This is generally a correct description of the basis in the hands of the donee. The basis of stock acquired by gift will be the fair market value on the date of the gift, unless the donor's basis is less than this fair market value and vice versa. ***Lesser of donor's basis or FMV at date of gift 20. On average, Social Security represents ______ of the income of the elderly. - ANSWER 38% 21. Tom, 59, is a widower and is receiving a widower's benefit on his deceased spouse's record. Tom is considering getting remarried. As a planner, you should suggest which one of the following? - ANSWER wait until 60 to remarry If you remarry before the age of 60, your widower's benefit will be terminated. If you are over the age of 60 when you remarry, your marriage will not affect your Social Security widower's benefit. 24. Periodic distributions from a qualified plan that take place over _____ years may not be rolled over into an IRA. - ANSWER 10 24. Periodic distributions from a qualified plan that take place over _____ years may not be rolled over into an IRA. - ANSWER Periodic distributions from a qualified plan that take place over nine years may be rolled over into an IRA. However, periodic distributions from a qualified plan that take place over a period of 10 years or more cannot be rolled over into an IRA. 25. Sam, age 62, begins receiving his Social Security income. His PIA is $1,500 per month. Because he has filed at age 62, his payment will be reduced by 25% to $1,125. His wife Linda, age 67, would like to begin spousal benefits. Her monthly income would be - ANSWER Because Linda has attained FRA, she would be eligible for 50% of Sam's PIA, or $750. 25. The distribution strategy that strives to mitigate sequence of returns risk by segmenting a portfolio according to when the funds will be needed is referred to as - ANSWER the bucket strategy 26. How are Social Security benefits funded? - ANSWER Social Security and FICA taxes are withheld by the employer. The total is 15.3% of payroll in 2016; the employer pays 7.65% and the employee pays 7.65%. Benefits are not paid by income taxes, and there is no trust fund. Monies are deposited into the general account, and benefits are paid out of the general account. 27. It is January 15, 2016. Janet is a successful architect and her spouse, Tom, has always worked as a part-time barista. Janet and Tom, both age 66, want to maximize their Social Security benefits by using the file and suspend strategy. You should advise them that - ANSWER The spouse who wants to file and suspend, typically the higher wage earner, must be 66 before May 2016 and must file and then suspend their benefits before the April 30, 2016, deadline. Effective May 1, 2016, this option will no longer be available, although those who were already employing this strategy will be grandfathered in and don't need to refile. 27. Under value investing, if an investor desired to increase his or her investment by $1,000 per month and the asset value had declined by $250 from the previous month, the investor would invest ______ the next month, assuming the price of the investment did not change. - ANSWER 1250 29. An individual that would like to utilize the Social Security "restricted application" strategy must have attained age 62 by which one of the following dates? - ANSWER December 31, 2015 3. The maximum contribution to a longevity annuity is - ANSWER 25% of an individual's retirement plan or $125,000, whichever is less. 4 key policy features to consider in selecting an LTC policy - ANSWER 1. elimination (or waiting) period before which benefits are paid 2. maximum benefit period 3. the daily benefit 4. inflation protection 43. Which type of life insurance below is referred to as "pure" life insurance? - ANSWER Term life 49. Frank Gorman, age 45, worked for 15 years for Bracket Manufacturing Company. Three years ago, he suffered an accident while commuting to work and was totally and permanently disabled. After a lengthy hospital stay, Frank applied for and began receiving Social Security disability benefits on January 1, 20X1. When will Frank become eligible for Medicare Part A? - ANSWER Individuals must be totally and permanently disabled (satisfy Social Security's definition of disability) and have received Social Security disability benefits for 24 months to be eligible for Medicare Part A. 54. In order to be considered a "qualified" policy, a long-term care policy must - ANSWER To be classified as a qualified policy, cognitive impairment must be covered, it must provide for nonforfeiture options, and it must be guaranteed renewable and conform to the National Association of Insurance Commissioners Model Act. It cannot include a determination of medical necessity by a physician nor can it include return of premium. 6 gaps in medicare coverage - ANSWER 1. deductibles for part A ($1288 for inpatient hospital care) Part B ($166) 2. cost of extended hospitalization under part A (322 per day for 61st-90th day, 644 per day for 91st-150th day, full cost after 150th day) 3. Coinsurance 20% on doctors services and out patient care 4. costs in excess of medicare part b approved charges 5. most self administered prescription drugs 6. nursing home costs 7. When must the designated beneficiary be determined in order to avoid having to distribute the full IRA balance under the 5-year rule? - ANSWER September 30 of the year following the participant's death. 8. Spousal benefits can be claimed as early as age ______. - ANSWER 62 80. What is the tax treatment for a shareholder participating in a common stock's dividend reinvestment program? - ANSWER The shareholder is treated as if he or she received a cash dividend equal to the fair market value of the shares purchased under the plan. 84. The valuation date for gifts is - ANSWER the date of completion of the transfer of the gift 84. The valuation date for gifts is - ANSWER the date the transfer is complete A bond with a 7% coupon, 1000 par value, and 20 year maturity if mkt int rates for similar bonds is 8% will be priced at - ANSWER 1. set calc at 2 pmt/yr 2. end mode 3. PMT=35 4. FV= 1000 5. n= 40 6. i/yr= 8 PV= 901 Accelerated benefits - ANSWER - used for catastrophic needs or where the individual is terminally ill with 6 months or less to live - pays out part or all of policys death benefit as a living benefit; the amt paid out with come against the death benefit payout Advantages and disadvantages of Medicare Advantage Plan - ANSWER Advantages - benefits not covered by fee for service medicare; drugs and eye glasses - predictable out of pocket costs - there is no need to have a medigap policy - greater emphasis on preventative care DISADVANTAGES - benefits may be limited, or denied, if network providers arent used - when outside service area, benefits may be limited to medically necessary and emergency care - HMOs can terminate programs Allowable IRA deduction limit equation - ANSWER IRA contribution limit x ((Upper Limit-AGI)/phaseout range) Annuity distribution options - ANSWER 1) lump sum 2) periodic withdrawals 3) receive interest only payments 4) annuitize the contract Annuity distributions 1) fixed amount 2) period certain - ANSWER 1) annuitant receives specific dollar amount until contract value is exhausted - if annuitant dies while value remains, the balance is paid to bene 2) benefit is paid for a specific length of time and then ends - if annuitant dies during, payments will continue to the designated bene Annuity distributions 1) interest income 2) Life income - ANSWER 1) only interest generated is paid out; contract value, or principal accumulation is not distributed, so it lasts indefinitely 2) When contract is annuitized the owner exchanges the account value for a stream of income that will last for life; if annuitant dies nothing is paid to bene "pure or single life annuity" Annuity distributions