CFP Practice Exam 1 with correct
Answers Graded A+ 2025/2026.
According to CFP Board's Code of Ethics and Standards of conduct, A CFP
Professional may represent the CFP Professionals or the CFP Professional's Firm's
compensation method as "fee only" only under which set of circumstances? correct
answers The CFP Professional and the CFP professional's firm receives no sales
related compensation in connection with any professional services the CFP professional
or the CFP Professional's firm provides to clients.
Henry wants to have $1m in investment assets in his taxable account when he retires in
10 years. Currently he has $100K invested in his account. He anticipates this account
will appreciate at an annual rate of 10% before taxes or 8% after taxes. How much must
he invest at the end of each month to achieve his goal? correct answers Answer:
$4,253.82
Keystrokes
N 120
I: 8/12
PV: -$100K
FV: $1,000,000
PMT:
Sydney is deciding whether to buy or lease a vehicle for her personal use only. If
Sydney's interest rate is 8% per year, which of the following options would be the least
expensive way to acquire the new car?
1. She should buy the car w/ no down payment and $700 monthly payments for 5 years.
2. She should buy the car with $6,000 down payment and $600 Monthly payments for 5
years.
3. She should lease the car for $2,000 down, $500 monthly payments for 5 years, and a
$10,000 payment at end of lease.
4. She should lease the car for $4,000 down, $550 monthly payments for 5 years, and
$5,000 payment at the end of the lease. correct answers Answer: 3 is the best choice
Calculation:
End Mode
N: 60
I: 8/12
, PMT: $500
FV: $10,000
Solve for PV which equals $31,371.
The total present value for this option is $31,371 + $2,000 down payment = $33,371
which of the following strategies will most likely increase a client's cash flow?
A. refinance the client's 2 year old 30 year mortgage at 7% with a 15 year mortgage at
6.5%
B. Exchange credit card debt for a home equity loan
C. Decrease the deductible on auto insurance
D. Invest in a deferred variable annuity. correct answers B. Exchange credit card debt
for a home equity loan
A client has a fully amortizing 15 year mortgage of $50,000 at 7% interest. Which of the
following is the approximate amount of interest the client will pay over the mortgage
term, based on equal monthly payments over the term of the loan? correct answers
Answer: $30,895
Calculation
N: 180 (15 years X 12 months)
I: 7/12 (7% Interest rate / 12 payments)
PV: -$50K
PMT: $449.41
$449.41 X 180= $80,893.80 is the amount of total payments including principal +
interest MINUS $50K loan = $30,895
A client plans to set aside an equal amount at the end of each month for the next 25
years as a retirement fund. The client's life expectancy after retirement is 20 years and
the client can earn 10% per year on any funds invested before or after retirement. The
capital need at the client's retirement age has been calculated to be $2,129,390. How
much must the client set aside to fund this amount rounded to the nearest dollar?
correct answers $1,604
Calculation
N: 300 (12X 25)
I: 10/12
FV: $2,128,390
PMT: - $1,604.11
A CFP professional is meeting with a client today to present a financial plan. Due to his
substantial wealth, the client feels that there is little that he cannot achieve. However,
Answers Graded A+ 2025/2026.
According to CFP Board's Code of Ethics and Standards of conduct, A CFP
Professional may represent the CFP Professionals or the CFP Professional's Firm's
compensation method as "fee only" only under which set of circumstances? correct
answers The CFP Professional and the CFP professional's firm receives no sales
related compensation in connection with any professional services the CFP professional
or the CFP Professional's firm provides to clients.
Henry wants to have $1m in investment assets in his taxable account when he retires in
10 years. Currently he has $100K invested in his account. He anticipates this account
will appreciate at an annual rate of 10% before taxes or 8% after taxes. How much must
he invest at the end of each month to achieve his goal? correct answers Answer:
$4,253.82
Keystrokes
N 120
I: 8/12
PV: -$100K
FV: $1,000,000
PMT:
Sydney is deciding whether to buy or lease a vehicle for her personal use only. If
Sydney's interest rate is 8% per year, which of the following options would be the least
expensive way to acquire the new car?
1. She should buy the car w/ no down payment and $700 monthly payments for 5 years.
2. She should buy the car with $6,000 down payment and $600 Monthly payments for 5
years.
3. She should lease the car for $2,000 down, $500 monthly payments for 5 years, and a
$10,000 payment at end of lease.
4. She should lease the car for $4,000 down, $550 monthly payments for 5 years, and
$5,000 payment at the end of the lease. correct answers Answer: 3 is the best choice
Calculation:
End Mode
N: 60
I: 8/12
, PMT: $500
FV: $10,000
Solve for PV which equals $31,371.
The total present value for this option is $31,371 + $2,000 down payment = $33,371
which of the following strategies will most likely increase a client's cash flow?
A. refinance the client's 2 year old 30 year mortgage at 7% with a 15 year mortgage at
6.5%
B. Exchange credit card debt for a home equity loan
C. Decrease the deductible on auto insurance
D. Invest in a deferred variable annuity. correct answers B. Exchange credit card debt
for a home equity loan
A client has a fully amortizing 15 year mortgage of $50,000 at 7% interest. Which of the
following is the approximate amount of interest the client will pay over the mortgage
term, based on equal monthly payments over the term of the loan? correct answers
Answer: $30,895
Calculation
N: 180 (15 years X 12 months)
I: 7/12 (7% Interest rate / 12 payments)
PV: -$50K
PMT: $449.41
$449.41 X 180= $80,893.80 is the amount of total payments including principal +
interest MINUS $50K loan = $30,895
A client plans to set aside an equal amount at the end of each month for the next 25
years as a retirement fund. The client's life expectancy after retirement is 20 years and
the client can earn 10% per year on any funds invested before or after retirement. The
capital need at the client's retirement age has been calculated to be $2,129,390. How
much must the client set aside to fund this amount rounded to the nearest dollar?
correct answers $1,604
Calculation
N: 300 (12X 25)
I: 10/12
FV: $2,128,390
PMT: - $1,604.11
A CFP professional is meeting with a client today to present a financial plan. Due to his
substantial wealth, the client feels that there is little that he cannot achieve. However,
