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CRPC Practice Exam || Latest Questions with Detailed 100% Verified Answers Question: 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 ©)$122,000 D)$263,000 Answer: C Question:At the end of last year, Bill Greer has the following financial information: Salaries$70,oo0Auto payments$5,000lnsurance payments$3, 800Food$8, oooCredit card balance$10,o00Dividends$1,100Utilitiess3, 50a Mortgage payments$14,000Taxes$13,000Clothing$9,ooolnterest incomes$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 2) $10,700 D) ($500) Answer: A Question: Which of the following are correct statements about income replacement percentages? |.Income replacement percentages are typically much higher for those with higher preretirement incomes. Il Income replacement percentages vary between low-income and high- income retirees. Il.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) land IV B) land Il c) land Ill What is the lump sum needed at the beginning of retirement to fund this income stream? A) $931,241 B) $388,017 Cc) $389,957 D) $598,504 Answer: C Question: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 a7 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. (2) Adjust income deficit for inflation over the preretirement period: go, ooopresent value of retirement income deficit2snumber 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)3onumber of periods in retirement The lump sum needed at the beginning of the Br Answer: D Question: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 Qo) monitor performance D) analyze information Aieweel 6 Question:Which one of the following is not a key attribute of an investment policy? A) clearly defined B) realistic 12) fluid D) long-term perspective Question: The two major risks associated with individual common stocks are A) interest rate risk and purchasing power risk. B) market risk and business risk. Cc) default risk and business risk. D) interest rate risk and exchange rate risk. Answer: 2 Question: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 B) $1,000.00 9) $1,074.39 D) $893.23 Answer: A Question:This year, your 63-year-old client had $17,025 of earned income and $30,000 of investment income. He was also drawing Social Security benefits. Which one of the following correctly describes the impact on his Social Security benefits? A) He loses $1 of benefits for every $3 above the "allowable limit." B) He loses $1 of benefits for every $1 above the "allowable limit." Cc) There is no reduction to his benefits. D) He loses $1 of benefits for every $2 above the "allowable limit." Answer: C Question:Which one of the following is a correct statement about the amount of Social Security retirement benefits available when a fully insured worker's retirement benefit begins at full retirement age (FRA)? A) If the spouse is at or above his or her full retirement age when commencing Social Security benefits, the spouse will receive at least 50% of the worker's PIA. B) The worker will receive 80% of his or her primary insurance amount (PIA). Cc) A 63-year-old spouse of the retired worker will receive at least 50% of the worker's PIA. D) the break-even calculation to determine how much longer Susan will need to live in order for delaying to "pay off." A) She should delay only if she expects to live beyond the next 15% years or so. B) She should delay beyond FRA regardless of her life expectancy in order to maximize her lifetime benefit. ©) She should begin at FRA if she expects to live beyond the next three years. D) She should begin her benefits at FRA regardless of her life expectancy in order to maximize her lifetime benefit. AWE A Question:Sam, age 62, begins receiving his Social Security income. His PIA is $1,500 per month. Because he has filed at age 62, his payment will be reduced by 25% to $1,125. His wife Linda, age 67, would like to begin spousal benefits. Her monthly income would be A) $562.50. B) $1,500.00. c) $1,125.00. D) $750.00. Answer: D Question:Unsystematic risk A) can be effectively eliminated. B) increases during periods of volatile interest rates. Cc) is reduced when markets fluctuate less. D) is increased through diversification. ANSWER A Question:Sources of risk include which of the following? [fluctuating exchange rates lL.a firm's financing decisions Ill higher interest rates IV.a loss of purchasing power A) land Ill B) ILand IV Cc) land Il D) 1, ll, Ill, and IV Answer: D Question:Which one of the following individuals would be best served by a $5,000 Roth conversion? A) Tom, a 51-year-old mid-level manager making $90,000 B) Rachel, a 63-year-old widowed grandmother whose income is $70,000 and has $55,000 in her IRA ©) George, a 28-year-old father of two whose wife is completing school; their income is $24,000 D) Mandy, a 30-year-old highly paid executive Answer: ¢ Question:Your client has established a balanced portfolio with various amounts allocated to different asset classes, and periodically she rebalances the portfolio to keep the same approximate percentages in the different asset classes. Her approach is A) core/satellite. B) dynamic. c) tactical. D) strategic. Answer: D Question:Harry, who is 34 years old, contributed $2,000 to a Roth IRA six years ago. By this year, the investments in his account had grown to $3,785. Finding himself in a financial bind, Harry is now compelled to withdraw $2,000 from this Roth IRA. What is the tax and penalty status of this withdrawal? A) Harry must pay tax and a $200 penalty. B) Harry does not have to pay any tax or penalty on the $2,000 distribution, even though he is only 34. ©) Harry must pay the penalty but no tax. D) Harry must pay tax on the $2,000, but there is no penalty. Answer: 8 Question:Norman and Brenda Walker are married taxpayers filing jointly. They are both 44 years old. Norman earned $132 this year, and Brenda earned $100,000. Brenda is an active participant in the qualified plan offered by her employer, and she contributed $1,500 to her IRA for this tax year. How much can be contributed to a spousal IRA and deducted for Norman for 2022? A) $0 B) $4,500 c) $132 He cannot make any withdrawals because the money has not been in the Roth IRA for five years or longer. B) He will not pay taxes or a penalty. QO) He only pays ordinary taxes because Roth IRA distributions are not subject to a penalty. D) He must pay taxes and a penalty on the full distribution. Answer: B Question:The "required beginning date" (RBD) for IRA distributions is which one of the following? A) April a of the year following the year in which age 72 was attained B) April 15 of the year following the year in which age 72 was attained Qo) April 15 of the year in which age 72 was attained D) April of the year in which age 72 was attained Answer: A Question: Over a period of 10 years, Mark contributed a total of $20,000 toa nondeductible IRA. The current value of Mark's IRA is $40,000, and Mark, who is now age 45, has decided to use all of his IRA assets for the down payment on asecond home. Assuming Mark's marginal tax bracket is 35%, how much does he owe in taxes and penalties? A) $2,000 Question:Richard, age 45, and his wife Betty, age 44, plan to contribute a total of $12,000 to their IRAs for 2022. They both work outside the home, and they file a joint income tax return. Richard is a teacher at the local high school and participates in a 403(b) plan. Betty's employer does not provide a retirement plan. They expect that their adjusted gross income for the year will be $150,000. What amount, if any, can they deduct for their IRA contributions? A) $6,000 B) $12,000 Cc) $4,900 D) $5,900 If a withdrawal of converted IRA funds is made from the Roth account before five years has elapsed, such a withdrawal may be subject to the 10% penalty. B) If Harry's Roth IRA meets the five-year holding period, the distribution will be a qualified distribution. Cc) Contribution amounts always come out of a Roth IRA account f Answer: A Question:The vested accrued benefit in George's tax-sheltered annuity is $87,500. He has never taken a loan from the plan but is interested in paying off his credit cards. Which of the following statements correctly describes George's option? A) George can borrow up to $50,000, but the term of the loan would be limited to five years. B) George could borrow up to $43,759, and since the loan will pay off debt, it could be for longer than five years. c) The amount of the loan would be limited to $50,000, and the loan could be for longer than five years. D) The amount of the loan would be limited to $43,750 and the term would be limited to five years. Answer: D Question:An income-tax-penalty-free distribution cannot be made from a tax-sheltered annuity (TSA) until the employee does which of the following? |.separates from service after attaining age 55 ll.attains age 55 Ill.becomes disabled or dies IV.takes a distribution under most hardship withdrawal rules A) land II B) 1, Il, lll, and 1V ©) Iland IV D) land Ill Answer: D Question:Charles turns 72 this year. His IRA was worth $100,000 at the end of last year. What is his RMD for this year? (The Uniform Table factor is 27.4 at age 72.) A) $3,650 B) $3,774 12) $3,906 D) $5,501 
