CRPC Practice Exam 2 Questions With Verified Answers.

CRPC Practice Exam 2 Questions With Verified Answers. Which of the following are examples of the second step of the retirement planning process? - answerI, III, and IV I prioritize goals III examine a person's tax situation IV determine important time horizons Which of the following personal expenses are likely to decrease following an individual's retirement? - answerII and IV II education IV income taxes not travel, utilities, and home repairs Which of the following are correct statements about the capital utilization strategy? - answerI, II, III, and IV I it produces an annual retirement income over a finite number of years II assuming the yield remains the same, the larger the retirement income that is paid, the shorter the number of years over which it will be paid III when the capital utilization approach is used, the planner must be careful in making assumptions about the life expectancy of the client IV the effect of taxes on retirement savings and distributions should be considered when the before-tax approach is used to calculate the future value of retirement assets Which one of the following is not a key element of an investment policy? - answernames of stocks to be in the portfolio essential elements of an investment policy: GRASP (Goals, Risk, Asset Allocation, Strategies/Suitable Investment, Periodic Review) Which one of the following is a characteristic of TIPS - answerthe increase in principal is taxable each year also, maturities up to 30 years your client owns a bond fund with a duration of 6.5. If interest rates increase 1.5% what is the expected change in price for this fund? - answer9.75% decrease 1.5% * -6.5% = -9.75% Recall that duration needs to have a negative sign in order to represent the inverse relationship between bond prices and interest rates. In this case, an increase in rates means the bonds will fall in price. Therefore, this fund will decrease in price about 9.75%. Also, you can remember that bond prices move opposite of interest rates. An increase in interest rates means the price of bonds will go down. the process of rebalancing is a key factor in - answerstrategic asset allocation Mark, a financial adviser, has a client who has worked in two positions during his lifetime. The client's first position was a state or local government position that was not covered by SS. The client is receiving a pension from that employment. His second position was covered by SS and he is eligible for SS retirement benefits. Mark should advise his client that - answerhis eligibility for SS retirement benefits may be reduced due to the windfall elimination provision (WEP) the government pension offset provision (GPO) impacts SS benefits owed to spouses, ex- spouses, or to survivor benefits Assume your client has a 5% bond, par value of $1,000, and 15 years to maturity. Comparable bonds are yielding 6%. What is the value of this bond? - answer$902 if the calc is set to 1 P/YR, then all factors, other than FV, need to be adjusted for semiannual payments. The keystrokes would be FV = 1000 PMT = 25 I/YR = 3 N = 30 then PV = -902 Suzy begins her SS retirement benefit at FRA. What is the amount she will receive? - answerprimary insurance amount (PIA) Which of the following are factors to consider