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CFP Practice Questions & Answers Verified 100% Correct!!
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CFP Practice Questions & Answers Verified 100% Correct!!
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Name: Score:60 Multiple choice questions
Term 1 of 60
According to the principle of _______ a CFP Board designee shall enter into a financial planning
engagement only when the relationship is warranted based on the individual needs and
objectives
Integrity
Fairness
Competence
Diligence
Term 2 of 60
Which are true: (1) A refundable tax credit cannot reduce a taxpayers' income tax liability to below
zero (2) A non-refundable tax credit can reduce a taxpayer's income tax liability below zero.
1 only
2 only
None of the above
All of the above
Term 3 of 60
All but which of the following are correct regarding torts?
A Tort can be either civil or criminal in nature
The most common type of unintentional tort is negligence
A tort is a civil wrong
The most common type of intentional tort is assault and battery
,Term 4 of 60
According to the concept of adverse selection, individuals who are ____ likely to need insurance
benefits are the ones ____ likely to purchase coverage
least, most
most, least
least, least
most, most
Term 5 of 60
All but which of the following are characteristics of a sole proprietorship?
Simplest form of business entity
No formal legal requirements
Lack of continuity of business life
Limited liability for the owner
Term 6 of 60
How do you determine cost basis of an asset acquired at an arm's length from a non-related
party?
Fair market value at the time of acquisition, depreciation over time, salvage value at the end
of useful life, market appreciation.
Cost plus expenses of a sale, such as taxes paid, installation, costs, freight, and
commissions incurred
Original purchase price, current market value, inflation adjustments, interest accrued.
Net income from the asset, capital gains tax paid, dividend income, stock split adjustments.
, Term 7 of 60
If dividends distributed from a life insurance policy exceed the premium paid to date, how are
they taxed?
Ordinary income
Non-taxable because they are a return of premium
Dividends are taxed as long term capital gains
Non-taxable until the the policy is surrendered
Term 8 of 60
Due to civil fraud, Jeremy underpaid his taxes last year by 8k. He will incur a penalty of ?
$4,000. The penalty for underpayment of taxes for civil fraud is 50%
$8,000. The penalty for underpayment of taxes for civil fraud is 100%
$2,000. The penalty for underpayment of taxes for civil fraud is 25%
$6,000. The penalty for underpayment of taxes for civil fraud is 75%
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