CFP exam 1 | 35 Questions with 100% Correct Answers | Updated & Verified

Which of the following is incorrect as a response to the following statement: An Adjustable Rate Mortgage (ARM) may be an appropriate choice if: a. A person is able to pay the mortgage off or down substantially (whether from the sale of the home or use of liquid assets) prior to the interest rate adjustment b. A person can accept and has the financial ability to absorb the interest-rate risk of the ARM. c. Interest rates are expected to increase and the risk tolerance of the individual is low. d. The spread between the ARM rate and a longer term fixed rate is sufficient to justify the increase in risk. - ANS - C T/F: A 15 year mortgage requires higher monthly payments than a 30 year mortgage and results in less interest paid over the life of the loan. - ANS - True T/F: I have to pay money to receive my credit report. - ANS - False T/F: Payment history affects my credit score. - ANS - True T/F: Ordinary marginal tax rates are higher than capital gain tax rates. - ANS - True How much will I save on an IRA contribution of $1,000 if my current year marginal tax rate is 32%? - ANS - $320 If I expect my marginal tax bracket to increase from 25% in 2017 to 32% in 2018, what is the additional marginal cost to me if I take a $1,000 IRA withdrawal in 2018? - ANS - $70 (320- 250)