CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
Mary Goodwin's financial situation is as follows:
Cash/cash equivalents $15,000
Short-term debts $8,000
Long-term debts $133,000
Tax expense $7,000
Auto note payments $4,000 #
Invested assets $60,000 $
Use assets $188,000 %
What is her net worth? ^
A)$111,000 &
B)$137,000 *(
C)$122,000 )_
D)$263,000 - (ANSWER)C
At the end of last year, Bill Greer has the following financial information:
Salaries$70,000Auto payments$5,000Insurance payments$3,800Food$8,000Credit card
balance$10,000Dividends$1,100Utilities$3,500Mortgage
payments$14,000Taxes$13,000Clothing$9,000Interest income$2,100Checking
account$4,000Vacations$8,400Donations$5,800
What is the cash flow surplus or (deficit) for Bill?
A)
$2,700
B)
$6,500
C)
$10,700
D)
($500) - (ANSWER)A
Which of the following are correct statements about income replacement percentages?
I.Income replacement percentages are typically much higher for those with higher
preretirement incomes.
II.Income replacement percentages vary between low-income and high-income retirees.
III.Income replacement ratios should not be used as the only basis for planning.
IV.Income replacement ratios are useful for younger clients as a guide to their long-range
planning and investing.
A)
I and IV
,CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
B)
I and II
C)
II and III
D)
II, III, and IV - (ANSWER)D #
$
If Tom and Jenny want to save a fixed amount annually to accumulate $2 million by their %
retirement date in 25 years (rather than an amount that grows with inflation each year), ^
what level annual end-of-year savings amount will they need to deposit each year, &
assuming their savings earn 7% annually? *(
A) )_
$55,692
B)
$31,621
C)
$29,552
D)
$54,130 - (ANSWER)B
Bill and Lisa Hahn have determined that they will need a monthly income of $6,000 during
retirement. They expect to receive Social Security retirement benefits amounting to $3,500
per month at the beginning of each month. Over the 12 remaining years of their
preretirement period, they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to assume a 6% annual
after-tax investment return compounded monthly. They want to start their monthly
retirement withdrawals on the first day they retire.
What is the lump sum needed at the beginning of retirement to fund this income stream?
A)
$931,241
B)
$388,017
C)
$389,957
D)
$598,504 - (ANSWER)C
,CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
Chris and Eve Bronson have analyzed their current living expenses and estimated their
retirement income need, net of expected Social Security benefits, to be $90,000 in today's
dollars. They are confident that they can earn a 7% after-tax return on their investments,
and they expect inflation to average 4% over the long term.
Determine the lump sum amount the Bronsons will need at the beginning of retirement to
fund their retirement income needs, using the worksheet below. #
$
(1) Adjust income deficit for inflation over the preretirement period:$ 90,000present value %
of retirement income deficit25number of periods until retirement4%% inflation rateFuture ^
value of income deficit in first retirement year$239,925(2) Determine retirement fund &
needed to meet income deficit:$239,925payment (future value of income deficit in first *(
retirement year)30number of periods in retirement )_
The lump sum needed at the beginning of the Br - (ANSWER)D
Assume a client and investment professional have worked together for several years.
Recently, the client's personal and financial circumstances have changed. According to the
course materials, what is the next asset management step that the investment
professional should take?
A)
make and implement recommendations
B)
gather data
C)
monitor performance
D)
analyze information - (ANSWER)B
Which one of the following is not a key attribute of an investment policy?
A)
clearly defined
B)
realistic
C)
fluid
D)
long-term perspective - (ANSWER)C
, CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
All of these are examples of asset allocation strategies except
A)
tactical.
B)
core/satellite.
C) #
strategic. $
D) %
alpha. - (ANSWER)D ^
&
Assume the following asset classes have the correlations to long-term government bonds *(
shown below: )_
Treasury bills:.12Gold:-.25Large stocks:.22Small stocks:.17
Which one of the following best exemplifies the impact of diversification on long-term
government bonds?
A)
Large stocks provide more diversification than small stocks.
B)
Small stocks provide more diversification than Treasury bills.
C)
Gold provides more diversification than large stocks.
D)
Treasury bills provide more diversification than gold. - (ANSWER)C
The two major risks associated with individual common stocks are
A)
interest rate risk and purchasing power risk.
B)
market risk and business risk.
C)
default risk and business risk.
D)
interest rate risk and exchange rate risk. - (ANSWER)B
What is the price of a bond with a 7% coupon, a $1,000 par value, and a maturity of 20
years if the market interest rate for similar bonds is 6%?
A)
$1,115.57
ANSWERS |ALREADY GRADED A+
Mary Goodwin's financial situation is as follows:
Cash/cash equivalents $15,000
Short-term debts $8,000
Long-term debts $133,000
Tax expense $7,000
Auto note payments $4,000 #
Invested assets $60,000 $
Use assets $188,000 %
What is her net worth? ^
A)$111,000 &
B)$137,000 *(
C)$122,000 )_
D)$263,000 - (ANSWER)C
At the end of last year, Bill Greer has the following financial information:
Salaries$70,000Auto payments$5,000Insurance payments$3,800Food$8,000Credit card
balance$10,000Dividends$1,100Utilities$3,500Mortgage
payments$14,000Taxes$13,000Clothing$9,000Interest income$2,100Checking
account$4,000Vacations$8,400Donations$5,800
What is the cash flow surplus or (deficit) for Bill?
A)
$2,700
B)
$6,500
C)
$10,700
D)
($500) - (ANSWER)A
Which of the following are correct statements about income replacement percentages?
I.Income replacement percentages are typically much higher for those with higher
preretirement incomes.
II.Income replacement percentages vary between low-income and high-income retirees.
III.Income replacement ratios should not be used as the only basis for planning.
IV.Income replacement ratios are useful for younger clients as a guide to their long-range
planning and investing.
A)
I and IV
,CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
B)
I and II
C)
II and III
D)
II, III, and IV - (ANSWER)D #
$
If Tom and Jenny want to save a fixed amount annually to accumulate $2 million by their %
retirement date in 25 years (rather than an amount that grows with inflation each year), ^
what level annual end-of-year savings amount will they need to deposit each year, &
assuming their savings earn 7% annually? *(
A) )_
$55,692
B)
$31,621
C)
$29,552
D)
$54,130 - (ANSWER)B
Bill and Lisa Hahn have determined that they will need a monthly income of $6,000 during
retirement. They expect to receive Social Security retirement benefits amounting to $3,500
per month at the beginning of each month. Over the 12 remaining years of their
preretirement period, they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to assume a 6% annual
after-tax investment return compounded monthly. They want to start their monthly
retirement withdrawals on the first day they retire.
What is the lump sum needed at the beginning of retirement to fund this income stream?
A)
$931,241
B)
$388,017
C)
$389,957
D)
$598,504 - (ANSWER)C
,CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
Chris and Eve Bronson have analyzed their current living expenses and estimated their
retirement income need, net of expected Social Security benefits, to be $90,000 in today's
dollars. They are confident that they can earn a 7% after-tax return on their investments,
and they expect inflation to average 4% over the long term.
Determine the lump sum amount the Bronsons will need at the beginning of retirement to
fund their retirement income needs, using the worksheet below. #
$
(1) Adjust income deficit for inflation over the preretirement period:$ 90,000present value %
of retirement income deficit25number of periods until retirement4%% inflation rateFuture ^
value of income deficit in first retirement year$239,925(2) Determine retirement fund &
needed to meet income deficit:$239,925payment (future value of income deficit in first *(
retirement year)30number of periods in retirement )_
The lump sum needed at the beginning of the Br - (ANSWER)D
Assume a client and investment professional have worked together for several years.
Recently, the client's personal and financial circumstances have changed. According to the
course materials, what is the next asset management step that the investment
professional should take?
A)
make and implement recommendations
B)
gather data
C)
monitor performance
D)
analyze information - (ANSWER)B
Which one of the following is not a key attribute of an investment policy?
A)
clearly defined
B)
realistic
C)
fluid
D)
long-term perspective - (ANSWER)C
, CRPC PRACTICE ACTUAL EXAM WITH QUESTIONS AND CORRECT VERIFIED
ANSWERS |ALREADY GRADED A+
All of these are examples of asset allocation strategies except
A)
tactical.
B)
core/satellite.
C) #
strategic. $
D) %
alpha. - (ANSWER)D ^
&
Assume the following asset classes have the correlations to long-term government bonds *(
shown below: )_
Treasury bills:.12Gold:-.25Large stocks:.22Small stocks:.17
Which one of the following best exemplifies the impact of diversification on long-term
government bonds?
A)
Large stocks provide more diversification than small stocks.
B)
Small stocks provide more diversification than Treasury bills.
C)
Gold provides more diversification than large stocks.
D)
Treasury bills provide more diversification than gold. - (ANSWER)C
The two major risks associated with individual common stocks are
A)
interest rate risk and purchasing power risk.
B)
market risk and business risk.
C)
default risk and business risk.
D)
interest rate risk and exchange rate risk. - (ANSWER)B
What is the price of a bond with a 7% coupon, a $1,000 par value, and a maturity of 20
years if the market interest rate for similar bonds is 6%?
A)
$1,115.57
