CRPC ACTUAL EXAM | COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS | 2026 LATEST UPDATED | GET A+
Richard wants to have an annual retirement income of $100,000 (payable at the beginning of
each year) protected against 3% inflation.
Assuming a 7% after-tax rate of return and a retirement period of 30 years, how much money
does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why. - (answer)Step One - Set the
calculator to BEGIN.
Step Two - Calculate the inflation adjusted rate of return (One plus the Rate of Return divided by
One plus the interest rate, minus one, multiplied by 100 = the inflation adjusted rate of return)
Put this number in the I/YR
Step Three - 100,000 goes in as a PMT
Step Four - 30 goes in as N
Step Five -Press PV
Richard needs $1,822,042.88 in today's dollars to meet his needs.
How do you calculate the inflation-adjusted rate of return? - (answer)1 plus the Rate of Return
Divided by
1 plus the interest rate
,minus one
multiplied by 100
Tom has been promised a stream of $40,000 annual payments at the end of each year for 25
years. The present value of these payments discounted at a rate of 5% is which one of the
following amounts? - (answer)Step One - The problem says END in it so you have to set your
calculator to the END mode.
Step two - Enter the $40000 as a PMT
Step Three - Enter 25 as the N.
Step Four - Enter 5 as the I/R
Step Six - Hit PV.
$563,758
Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If
inflation continues to average 3.5%, approximately what amount will Nick need in 20 years to
equal the purchasing power of $75,000 today? (Round your answer.) - (answer)If you know the
Rule of 72, and you divide 3.5 into 72, you arrive at the number 20, which is the number of years
it will take for a sum to double. With a calculator, you can solve for the future value of $75,000
over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
What is the second step in the retirement planning process? - (answer)The second step in the
retirement planning process is to gather client data, including goals and expectations
,What is the first step in the retirement planning process? - (answer)The first step is to establish
and define the client-counselor relationship which includes disclosing the counselor's
compensation arrangement
What is a characteristic of a TIP? - (answer)The increase in principal is taxable each year. Any
annual increase in principal is subject to federal taxation (unless in a tax-deferred account).
Returns are tied to the consumer price index. TIPS are sold at par value and have maturities up to
30 years.
How you calculate the weighted beta of a portfolio? - (answer)You multiply the weight times the
beta for each stock, then you add those numbers up together.
What does Jensen's alpha tell you - (answer)The percentage a manager over or underperformed
based on the amount of risk taken.
Moving averages, graphs and statistics regarding the supply and demand of stocks are an
example of what kind of analysis? - (answer)Technical analysis.
Financial statement ratios are part of what kind of analysis? - (answer)Fundamental analysis.
When performing bond calculations, what general assumptions should be made unless stated
otherwise? - (answer)The coupon rate is annualized but paid semiannually for U.S. bonds. The
face value of the bond should be assumed to be $1,000, not $10,000. The coupon rate is stated on
an annual basis but is assumed to be paid semiannually for U.S. bonds and the coupon payment
is always made at the end of the period, not the beginning.
Which is correct regarding the additional payroll tax for high wage earners that was brought
about by the Patient Protection and Affordable Care Act - (answer)The tax was designed to
provide additional funding for Medicare. This tax is an additional Medicare tax. The 0.9% tax is
employee paid and applies to high earners only.
, Assume that a worker's Social Security full retirement age is 66. What percentage of the worker's
full retirement age benefits will be paid to her at age 62? - (answer)A worker can begin receiving
Social Security retirement benefits at age 62, but at a 25% reduction from the full amount that
would be received at full retirement age 66. So 100% benefits minus the reduction of 25% =
75%.
Remember 62 = 25% reduction!
What is a correct statement about the effect that income and asset ownership have on Social
Security benefit payments? - (answer)Unearned income, such as income from investment assets,
has no effect on the amount of Social Security benefits that will be paid to a worker. Similarly,
the value of assets owned by the worker does not affect eligibility for Social Security benefits.
What should have no impact on your decision of when to receive Social Security benefits? -
(answer)The earnings of your dependents. Their income has no impact on your Social Security
Benefits.
What SHOULD have an impact on your decision of when to receive Social Security benefits? -
(answer)The income benefit provided, additional sources of income and condition of health.
Over a period of 10 years, Mike contributed a total of $20,000 to a non deductible IRA. The
current value of his IRA is $32,000 and Mike, who is 50 years old, has decided to use his IRA
assets to purchase a second home. Assuming his tax bracket is 35%, how much will he owe in
taxes and penalties? - (answer)What do you do first?
You have to remember that penalties in a non deductible IRA apply ONLY to the earnings. So
$32000 - $20000 = $12000.
Mike is only 50, so that's a 10% penalty.
Add that to his tax bracket so 35% + 10% = 45%.
SOLUTIONS | 2026 LATEST UPDATED | GET A+
Richard wants to have an annual retirement income of $100,000 (payable at the beginning of
each year) protected against 3% inflation.
Assuming a 7% after-tax rate of return and a retirement period of 30 years, how much money
does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why. - (answer)Step One - Set the
calculator to BEGIN.
Step Two - Calculate the inflation adjusted rate of return (One plus the Rate of Return divided by
One plus the interest rate, minus one, multiplied by 100 = the inflation adjusted rate of return)
Put this number in the I/YR
Step Three - 100,000 goes in as a PMT
Step Four - 30 goes in as N
Step Five -Press PV
Richard needs $1,822,042.88 in today's dollars to meet his needs.
How do you calculate the inflation-adjusted rate of return? - (answer)1 plus the Rate of Return
Divided by
1 plus the interest rate
,minus one
multiplied by 100
Tom has been promised a stream of $40,000 annual payments at the end of each year for 25
years. The present value of these payments discounted at a rate of 5% is which one of the
following amounts? - (answer)Step One - The problem says END in it so you have to set your
calculator to the END mode.
Step two - Enter the $40000 as a PMT
Step Three - Enter 25 as the N.
Step Four - Enter 5 as the I/R
Step Six - Hit PV.
$563,758
Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If
inflation continues to average 3.5%, approximately what amount will Nick need in 20 years to
equal the purchasing power of $75,000 today? (Round your answer.) - (answer)If you know the
Rule of 72, and you divide 3.5 into 72, you arrive at the number 20, which is the number of years
it will take for a sum to double. With a calculator, you can solve for the future value of $75,000
over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
What is the second step in the retirement planning process? - (answer)The second step in the
retirement planning process is to gather client data, including goals and expectations
,What is the first step in the retirement planning process? - (answer)The first step is to establish
and define the client-counselor relationship which includes disclosing the counselor's
compensation arrangement
What is a characteristic of a TIP? - (answer)The increase in principal is taxable each year. Any
annual increase in principal is subject to federal taxation (unless in a tax-deferred account).
Returns are tied to the consumer price index. TIPS are sold at par value and have maturities up to
30 years.
How you calculate the weighted beta of a portfolio? - (answer)You multiply the weight times the
beta for each stock, then you add those numbers up together.
What does Jensen's alpha tell you - (answer)The percentage a manager over or underperformed
based on the amount of risk taken.
Moving averages, graphs and statistics regarding the supply and demand of stocks are an
example of what kind of analysis? - (answer)Technical analysis.
Financial statement ratios are part of what kind of analysis? - (answer)Fundamental analysis.
When performing bond calculations, what general assumptions should be made unless stated
otherwise? - (answer)The coupon rate is annualized but paid semiannually for U.S. bonds. The
face value of the bond should be assumed to be $1,000, not $10,000. The coupon rate is stated on
an annual basis but is assumed to be paid semiannually for U.S. bonds and the coupon payment
is always made at the end of the period, not the beginning.
Which is correct regarding the additional payroll tax for high wage earners that was brought
about by the Patient Protection and Affordable Care Act - (answer)The tax was designed to
provide additional funding for Medicare. This tax is an additional Medicare tax. The 0.9% tax is
employee paid and applies to high earners only.
, Assume that a worker's Social Security full retirement age is 66. What percentage of the worker's
full retirement age benefits will be paid to her at age 62? - (answer)A worker can begin receiving
Social Security retirement benefits at age 62, but at a 25% reduction from the full amount that
would be received at full retirement age 66. So 100% benefits minus the reduction of 25% =
75%.
Remember 62 = 25% reduction!
What is a correct statement about the effect that income and asset ownership have on Social
Security benefit payments? - (answer)Unearned income, such as income from investment assets,
has no effect on the amount of Social Security benefits that will be paid to a worker. Similarly,
the value of assets owned by the worker does not affect eligibility for Social Security benefits.
What should have no impact on your decision of when to receive Social Security benefits? -
(answer)The earnings of your dependents. Their income has no impact on your Social Security
Benefits.
What SHOULD have an impact on your decision of when to receive Social Security benefits? -
(answer)The income benefit provided, additional sources of income and condition of health.
Over a period of 10 years, Mike contributed a total of $20,000 to a non deductible IRA. The
current value of his IRA is $32,000 and Mike, who is 50 years old, has decided to use his IRA
assets to purchase a second home. Assuming his tax bracket is 35%, how much will he owe in
taxes and penalties? - (answer)What do you do first?
You have to remember that penalties in a non deductible IRA apply ONLY to the earnings. So
$32000 - $20000 = $12000.
Mike is only 50, so that's a 10% penalty.
Add that to his tax bracket so 35% + 10% = 45%.
