CRPC PRACTICE EXAM 2 QUESTIONS
WITH CORRECT ANSWERS 2025/2026
WhichAofAtheAfollowingAareAcorrectAstatementsAaboutAtheAcapitalAutilizationAstrategy?A-
AcorrectAanswersI.AItAproducesAanAannualAretirementAincomeAoverAaAfiniteAnumberAofAyears.
II.AAssumingAtheAyieldAremainsAtheAsame,AtheAlargerAtheAretirementAincomeAthatAisApaid,AtheAs
horterAtheAnumberAofAyearsAoverAwhichAitAwillAbeApaid.
III.AWhenAtheAcapitalAutilizationAapproachAisAused,AtheAplannerAmustAbeAcarefulAinAmakingAassu
mptionsAaboutAtheAlifeAexpectancyAofAtheAclient.
IV.ATheAeffectAofAtaxesAonAretirementAsavingsAandAdistributionsAshouldAbeAconsideredAwhenAth
eAbefore-taxAapproachAisAusedAtoAcalculateAtheAfutureAvalueAofAretirementAassets.
WhichAoneAofAtheAfollowingAisAnotAaAkeyAelementAofAanAinvestmentApolicy?A-
AcorrectAanswersA)AaAprovisionAforAperiodicAreview
B)AtheAacceptableAriskAtoleranceAlevel
C)AaAtargetAassetAallocation
D)AnamesAofAspecificAstocksAtoAbeAinAtheAportfolio
--D
TheAkeyAelementsAinAanAinvestmentApolicyAareAaAclearAstatementAofAtheAclient'sAgoal,AsuitableAi
nvestmentAvehiclesAandAstrategies,AtheAacceptableAriskAtoleranceAlevelAforAtheAclient,AassetAall
ocationAguidelines,AandAaAprovisionAforAperiodicAreview.AOneAwayAtoArememberAtheAessentialA
elementsAofAanAinvestmentApolicyAisAtheAacronymA"GRASP"A(Goals,ARisk,AAssetAAllocation,AStra
tegies/SuitableAInvestment-
meaningAtheAinvestmentAcategoriesAthatAmayAorAmayAnotAbeAused-
andAPeriodicAReview).ASpecificAinvestmentsAwouldAbeAdeterminedAafterAtheAinvestmentApolicy
AisAcreated.
WhichAoneAofAtheAfollowingAisAaAcharacteristicAofATreasuryAinflation-
protectedAsecuritiesA(TIPS)?A-AcorrectAanswersA)ATheyAareAsoldAatAaAdiscount.
B)ATheAincreaseAinAprincipalAisAtaxableAeachAyear.
C)ATheirAreturnsAareAtiedAtoAtheAproducerApriceAindex.
D)ATheyAareAissuedAwithAmaturitiesAupAtoA40Ayears.
YourAclientAownsAaAbondAfundAwithAaAdurationAofA6.5.AIfAinterestAratesAincreaseA1.5%,AwhatAisAt
heAexpectedAchangeAinApriceAforAthisAfund?A-AcorrectAanswersA)A6.5%Adecrease
B)A9.75%Aincrease
,C)A9.75%Adecrease
D)A6.5%Aincrease
--C
1.5%A-6.5A=A-
9.75%.ARecallAthatAdurationAneedsAtoAhaveAaAnegativeAsignAinAorderAtoArepresentAtheAinverseAr
elationshipAbetweenAbondApricesAandAinterestArates.AInAthisAcase,AanAincreaseAinAratesAmeansAt
heAbondsAorAbondAfundsAwillAfallAinAprice.ATherefore,AthisAfundAwillAdecreaseAinApriceAaboutA9.7
5%.AAlso,AyouAcanArememberAthatAbondApricesAmoveAoppositeAtoAinterestArates.AAnAincreaseAi
nAinterestAratesAmeansAtheApriceAofAbondsAwillAgoAdown.
TheAprocessAofArebalancingAisAaAkeyAfactorAinA-AcorrectAanswersStrategicAassetAallocation.
StrategicAassetAallocationAinvolvesAobtainingAtheAbestAassetAmixAforAaAclientAoverAaAlongAperiod
.AForAexample,AthisAmightAbeA60%AstocksAandA40%Abonds.AWhenAtheseApercentagesAchangeAdu
eAtoAmarketAmovements,AthisAstrategicAassetAallocationArequiresAtheAportfolioAtoAbeArebalance
dAbackAtoAtheAtargetAmix,AinAthisAcaseA60/40Astocks/bonds.
WhatAdoesAJensen'sAalphaAtellAyou?A-AcorrectAanswerstheApercentageAaAmanagerAover-
AorAunderperformedAbasedAonAtheAamountAofAriskAtaken
TheApercentageAofAreturnAthatAcanAbeAattributedAtoAsystematicAriskAisAreferredAtoAasAtheA-
AcorrectAanswerscoefficientAofAdeterminationA(R2).
WhichAofAtheAfollowingAareAnotAusedAinAtechnicalAanalysis?A-AcorrectAanswersA)Agraphs
B)AfinancialAstatementAratios
C)AmovingAaverages
D)AsupplyAandAdemandAofAstocks
--B
MovingAaverages,Agraphs,AandAstatisticsAregardingAtheAsupplyAandAdemandAofAstocksAareAusedA
byAtechnicians.A
FinancialAstatementAratiosAareApartAofAfundamentalAanalysis.
WhenAperformingAbondAcalculations,AwhichAofAtheAfollowingAgeneralAassumptionsAshouldAbeA
madeAunlessAstatedAotherwise?A-
AcorrectAanswersA)ATheAcouponArateAisAannualizedAbutApaidAsemiannuallyAforAU.S.Abonds.
, B)AOnAaAfinancialAcalculator,AbondsAareAcalculatedAinAtheABeginAmode.
C)ATheAcouponApaymentAusedAinAbondAcalculationsAisAtheAannualAamount.
D)ATheAfaceAvalueAofAtheAbondAisA$10,000.
--A
TheAfaceAvalueAofAtheAbondAshouldAbeAassumedAtoAbeA$1,000,AnotA$10,000.ATheAcouponArateAi
sAstatedAonAanAannualAbasisAbutAisAassumedAtoAbeApaidAsemiannuallyAforAU.S.AbondsAandAtheAc
ouponApaymentAisAalwaysAmadeAatAtheAendAofAtheAperiod,AnotAtheAbeginning.AAllAbonds,AevenA
zeroAcouponAbonds,AareAcompoundedAsemiannuallyAinAtheAEndAmode.AThisAmakesAallAbondAYT
MAquotesAstandardizedAforAeasyAcomparison.
AssumeAyourAclientAhasAaA5%Abond,AparAvalueAofA$1,000,AandA15AyearsAtoAmaturity.AComparabl
eAbondsAareAyieldingA6%.AWhatAisAtheAvalueAofAthisAbond?A-AcorrectAanswersA)A$1,010
B)A$902
C)A$925
D)A$875
--B
IfAtheAcalculatorAisAsetAforA1AP/YR,AthenAallAfactors,AotherAthanAFV,AneedAtoAbeAadjustedAforAsem
iannualApayments.ATheAkeystrokesAwouldAbe:A1,000A[FV],A25A[PMT],A3A[I/YR],A30A[N],AthenAsolv
eAforA[PV]A=A-
902.AIfAtheAcalculatorAisAsetAatA2AP/YR,AthenA[I/YR]AisA6AandA[N]AisAenteredAasA15A[SHIFT]A[N].
WhichAofAtheAfollowingAisAcorrectAregardingAtheAadditionalApayrollAtaxAforAhighAwageAearnersAt
hatAwasAbroughtAaboutAbyAtheAAffordableACareAAct?A-
AcorrectAanswersA)ATheAtaxAappliesAtoAthoseAwithAanAAGIAinAexcessAofA$500,000.
B)ATheAtaxAisA1.9%.
C)ATheAtaxAisAsplitAbetweenAtheAemployerAandAemployee.
D)ATheAtaxAwasAdesignedAtoAprovideAadditionalAfundingAforAMedicare.
--D
ThisAtaxAisAanAadditionalAMedicareAtax.ATheA0.9%AtaxAisAemployeeApaidAandAappliesAtoAhighAear
nersAonlyA(AGIAinAexcessAofA$250,000AforAjointAfilersAandA$200,000AforAsingleAfilers,AnotAindexe
d).
WITH CORRECT ANSWERS 2025/2026
WhichAofAtheAfollowingAareAcorrectAstatementsAaboutAtheAcapitalAutilizationAstrategy?A-
AcorrectAanswersI.AItAproducesAanAannualAretirementAincomeAoverAaAfiniteAnumberAofAyears.
II.AAssumingAtheAyieldAremainsAtheAsame,AtheAlargerAtheAretirementAincomeAthatAisApaid,AtheAs
horterAtheAnumberAofAyearsAoverAwhichAitAwillAbeApaid.
III.AWhenAtheAcapitalAutilizationAapproachAisAused,AtheAplannerAmustAbeAcarefulAinAmakingAassu
mptionsAaboutAtheAlifeAexpectancyAofAtheAclient.
IV.ATheAeffectAofAtaxesAonAretirementAsavingsAandAdistributionsAshouldAbeAconsideredAwhenAth
eAbefore-taxAapproachAisAusedAtoAcalculateAtheAfutureAvalueAofAretirementAassets.
WhichAoneAofAtheAfollowingAisAnotAaAkeyAelementAofAanAinvestmentApolicy?A-
AcorrectAanswersA)AaAprovisionAforAperiodicAreview
B)AtheAacceptableAriskAtoleranceAlevel
C)AaAtargetAassetAallocation
D)AnamesAofAspecificAstocksAtoAbeAinAtheAportfolio
--D
TheAkeyAelementsAinAanAinvestmentApolicyAareAaAclearAstatementAofAtheAclient'sAgoal,AsuitableAi
nvestmentAvehiclesAandAstrategies,AtheAacceptableAriskAtoleranceAlevelAforAtheAclient,AassetAall
ocationAguidelines,AandAaAprovisionAforAperiodicAreview.AOneAwayAtoArememberAtheAessentialA
elementsAofAanAinvestmentApolicyAisAtheAacronymA"GRASP"A(Goals,ARisk,AAssetAAllocation,AStra
tegies/SuitableAInvestment-
meaningAtheAinvestmentAcategoriesAthatAmayAorAmayAnotAbeAused-
andAPeriodicAReview).ASpecificAinvestmentsAwouldAbeAdeterminedAafterAtheAinvestmentApolicy
AisAcreated.
WhichAoneAofAtheAfollowingAisAaAcharacteristicAofATreasuryAinflation-
protectedAsecuritiesA(TIPS)?A-AcorrectAanswersA)ATheyAareAsoldAatAaAdiscount.
B)ATheAincreaseAinAprincipalAisAtaxableAeachAyear.
C)ATheirAreturnsAareAtiedAtoAtheAproducerApriceAindex.
D)ATheyAareAissuedAwithAmaturitiesAupAtoA40Ayears.
YourAclientAownsAaAbondAfundAwithAaAdurationAofA6.5.AIfAinterestAratesAincreaseA1.5%,AwhatAisAt
heAexpectedAchangeAinApriceAforAthisAfund?A-AcorrectAanswersA)A6.5%Adecrease
B)A9.75%Aincrease
,C)A9.75%Adecrease
D)A6.5%Aincrease
--C
1.5%A-6.5A=A-
9.75%.ARecallAthatAdurationAneedsAtoAhaveAaAnegativeAsignAinAorderAtoArepresentAtheAinverseAr
elationshipAbetweenAbondApricesAandAinterestArates.AInAthisAcase,AanAincreaseAinAratesAmeansAt
heAbondsAorAbondAfundsAwillAfallAinAprice.ATherefore,AthisAfundAwillAdecreaseAinApriceAaboutA9.7
5%.AAlso,AyouAcanArememberAthatAbondApricesAmoveAoppositeAtoAinterestArates.AAnAincreaseAi
nAinterestAratesAmeansAtheApriceAofAbondsAwillAgoAdown.
TheAprocessAofArebalancingAisAaAkeyAfactorAinA-AcorrectAanswersStrategicAassetAallocation.
StrategicAassetAallocationAinvolvesAobtainingAtheAbestAassetAmixAforAaAclientAoverAaAlongAperiod
.AForAexample,AthisAmightAbeA60%AstocksAandA40%Abonds.AWhenAtheseApercentagesAchangeAdu
eAtoAmarketAmovements,AthisAstrategicAassetAallocationArequiresAtheAportfolioAtoAbeArebalance
dAbackAtoAtheAtargetAmix,AinAthisAcaseA60/40Astocks/bonds.
WhatAdoesAJensen'sAalphaAtellAyou?A-AcorrectAanswerstheApercentageAaAmanagerAover-
AorAunderperformedAbasedAonAtheAamountAofAriskAtaken
TheApercentageAofAreturnAthatAcanAbeAattributedAtoAsystematicAriskAisAreferredAtoAasAtheA-
AcorrectAanswerscoefficientAofAdeterminationA(R2).
WhichAofAtheAfollowingAareAnotAusedAinAtechnicalAanalysis?A-AcorrectAanswersA)Agraphs
B)AfinancialAstatementAratios
C)AmovingAaverages
D)AsupplyAandAdemandAofAstocks
--B
MovingAaverages,Agraphs,AandAstatisticsAregardingAtheAsupplyAandAdemandAofAstocksAareAusedA
byAtechnicians.A
FinancialAstatementAratiosAareApartAofAfundamentalAanalysis.
WhenAperformingAbondAcalculations,AwhichAofAtheAfollowingAgeneralAassumptionsAshouldAbeA
madeAunlessAstatedAotherwise?A-
AcorrectAanswersA)ATheAcouponArateAisAannualizedAbutApaidAsemiannuallyAforAU.S.Abonds.
, B)AOnAaAfinancialAcalculator,AbondsAareAcalculatedAinAtheABeginAmode.
C)ATheAcouponApaymentAusedAinAbondAcalculationsAisAtheAannualAamount.
D)ATheAfaceAvalueAofAtheAbondAisA$10,000.
--A
TheAfaceAvalueAofAtheAbondAshouldAbeAassumedAtoAbeA$1,000,AnotA$10,000.ATheAcouponArateAi
sAstatedAonAanAannualAbasisAbutAisAassumedAtoAbeApaidAsemiannuallyAforAU.S.AbondsAandAtheAc
ouponApaymentAisAalwaysAmadeAatAtheAendAofAtheAperiod,AnotAtheAbeginning.AAllAbonds,AevenA
zeroAcouponAbonds,AareAcompoundedAsemiannuallyAinAtheAEndAmode.AThisAmakesAallAbondAYT
MAquotesAstandardizedAforAeasyAcomparison.
AssumeAyourAclientAhasAaA5%Abond,AparAvalueAofA$1,000,AandA15AyearsAtoAmaturity.AComparabl
eAbondsAareAyieldingA6%.AWhatAisAtheAvalueAofAthisAbond?A-AcorrectAanswersA)A$1,010
B)A$902
C)A$925
D)A$875
--B
IfAtheAcalculatorAisAsetAforA1AP/YR,AthenAallAfactors,AotherAthanAFV,AneedAtoAbeAadjustedAforAsem
iannualApayments.ATheAkeystrokesAwouldAbe:A1,000A[FV],A25A[PMT],A3A[I/YR],A30A[N],AthenAsolv
eAforA[PV]A=A-
902.AIfAtheAcalculatorAisAsetAatA2AP/YR,AthenA[I/YR]AisA6AandA[N]AisAenteredAasA15A[SHIFT]A[N].
WhichAofAtheAfollowingAisAcorrectAregardingAtheAadditionalApayrollAtaxAforAhighAwageAearnersAt
hatAwasAbroughtAaboutAbyAtheAAffordableACareAAct?A-
AcorrectAanswersA)ATheAtaxAappliesAtoAthoseAwithAanAAGIAinAexcessAofA$500,000.
B)ATheAtaxAisA1.9%.
C)ATheAtaxAisAsplitAbetweenAtheAemployerAandAemployee.
D)ATheAtaxAwasAdesignedAtoAprovideAadditionalAfundingAforAMedicare.
--D
ThisAtaxAisAanAadditionalAMedicareAtax.ATheA0.9%AtaxAisAemployeeApaidAandAappliesAtoAhighAear
nersAonlyA(AGIAinAexcessAofA$250,000AforAjointAfilersAandA$200,000AforAsingleAfilers,AnotAindexe
d).
