CRPC EXAM STUDY GUIDE 2026/2027
COMPLETE QUESTIONS WITH VERIFIED
CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
Diversification - ANSWER✔Acquiring assets with low or negative correlations to
each other with the goal of lowering overall risk
Correlation - ANSWER✔- a relative measure of the degree to which the returns of
two assets move together
- range from +1.0 to -1.0
- in practice negative correlations are rare
- the further a correlation is from +1.0, the more diversified
Asset allocation - ANSWER✔- the apportioning of available funds among a
number of asset classes in a way that meets the needs of a particular client,
dampens the effects of periodic market fluctuations, and meets investment goals
Four steps in the asset allocation process - ANSWER✔1) select asset classes to be
represented
2) determine the percentage that each asset class should represent in the total
portfolio
3) Select individual securities
,4) Review and rebalance
Strategic Asset Allocation - ANSWER✔- determine asset mix that provides
optimal balance of expected risk and ROR
- asset classes selected and % weight determined
- Used to develop long-term allocation policy
- utilizes rebalancing to maintain targeted weight
Tactical Asset Allocation - ANSWER✔- used to develop short term strategies to
exploit changes in market conditions
- ofter viewed as a contrarian strategy
- periodic revisions of asset mix; moving funds from over valued investments to
undervalued investments
- market timing strategy
Core-Satellite asset allocation - ANSWER✔70-80% invested in broad index fund
or etfs
- remaining satellite consists of actively managed MF's in niches such as sector
funds or alt investments like hedge funds
Contrarian Strategy - ANSWER✔
Dollar-Cost averaging - ANSWER✔- investing regular amounts at regular
intervals
- reduce market timing risk, improve cost per share
Low P/E strategy - ANSWER✔Ratio of 1= fair value
,Ratio > 1= overvalued
Ratio < 1= undervalued
** The long-term average P/E for stocks is 16
Bond Investment strategies (2) - ANSWER✔1) Ladder: Owning equal amounts of
bonds along with maturities of equal intervals; ex. 50k of bonds with 10k each in
2,4,6,8,10 year maturities
2) Barbell: Owning short-term and long-term bonds, each with a ladder; ex. 100k
of bonds with 10k each in 1,2,3,4,5 year maturities and in 16,17,18,19,20 year
maturities
Systematic Risk - ANSWER✔P-purchasing power risk
R- reinvestment risk
I- interest rate risk
M- market risk
E- exchange rate risk
Social Security- Fully insured - ANSWER✔- having 10 years of employment
covered by social security; expressed as "40 quarters of coverage"
- Must be fully insured for retirement benefits
- fully insured workers are also eligible for disability if he has earned at least 20
work credits in last 10 years
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? - ANSWER✔Assets = $263,000; liabilities = $141,000, so
net worth is $122,000. Taxes and auto note payments appear on the cash flow
statement. 1-3
Salaries$70,000
Auto payments$5,000
Insurance payments$3,800
Food$8,000
Credit card balance$10,000
Dividends$1,100
Utilities$3,500
Mortgage payments$14,000
Taxes$13,000
Clothing$9,000
Interest income$2,100
Checking account$4,000
Vacations$8,400
Donations$5,800
What is the cash flow surplus or (deficit) for Bill? - ANSWER✔Income = $70,000
+ $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 + $8,000 + $3,500 +
$14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so there is a surplus of
$2,700. The checking account and credit card balances would be on the statement
of financial position.
COMPLETE QUESTIONS WITH VERIFIED
CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
Diversification - ANSWER✔Acquiring assets with low or negative correlations to
each other with the goal of lowering overall risk
Correlation - ANSWER✔- a relative measure of the degree to which the returns of
two assets move together
- range from +1.0 to -1.0
- in practice negative correlations are rare
- the further a correlation is from +1.0, the more diversified
Asset allocation - ANSWER✔- the apportioning of available funds among a
number of asset classes in a way that meets the needs of a particular client,
dampens the effects of periodic market fluctuations, and meets investment goals
Four steps in the asset allocation process - ANSWER✔1) select asset classes to be
represented
2) determine the percentage that each asset class should represent in the total
portfolio
3) Select individual securities
,4) Review and rebalance
Strategic Asset Allocation - ANSWER✔- determine asset mix that provides
optimal balance of expected risk and ROR
- asset classes selected and % weight determined
- Used to develop long-term allocation policy
- utilizes rebalancing to maintain targeted weight
Tactical Asset Allocation - ANSWER✔- used to develop short term strategies to
exploit changes in market conditions
- ofter viewed as a contrarian strategy
- periodic revisions of asset mix; moving funds from over valued investments to
undervalued investments
- market timing strategy
Core-Satellite asset allocation - ANSWER✔70-80% invested in broad index fund
or etfs
- remaining satellite consists of actively managed MF's in niches such as sector
funds or alt investments like hedge funds
Contrarian Strategy - ANSWER✔
Dollar-Cost averaging - ANSWER✔- investing regular amounts at regular
intervals
- reduce market timing risk, improve cost per share
Low P/E strategy - ANSWER✔Ratio of 1= fair value
,Ratio > 1= overvalued
Ratio < 1= undervalued
** The long-term average P/E for stocks is 16
Bond Investment strategies (2) - ANSWER✔1) Ladder: Owning equal amounts of
bonds along with maturities of equal intervals; ex. 50k of bonds with 10k each in
2,4,6,8,10 year maturities
2) Barbell: Owning short-term and long-term bonds, each with a ladder; ex. 100k
of bonds with 10k each in 1,2,3,4,5 year maturities and in 16,17,18,19,20 year
maturities
Systematic Risk - ANSWER✔P-purchasing power risk
R- reinvestment risk
I- interest rate risk
M- market risk
E- exchange rate risk
Social Security- Fully insured - ANSWER✔- having 10 years of employment
covered by social security; expressed as "40 quarters of coverage"
- Must be fully insured for retirement benefits
- fully insured workers are also eligible for disability if he has earned at least 20
work credits in last 10 years
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? - ANSWER✔Assets = $263,000; liabilities = $141,000, so
net worth is $122,000. Taxes and auto note payments appear on the cash flow
statement. 1-3
Salaries$70,000
Auto payments$5,000
Insurance payments$3,800
Food$8,000
Credit card balance$10,000
Dividends$1,100
Utilities$3,500
Mortgage payments$14,000
Taxes$13,000
Clothing$9,000
Interest income$2,100
Checking account$4,000
Vacations$8,400
Donations$5,800
What is the cash flow surplus or (deficit) for Bill? - ANSWER✔Income = $70,000
+ $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 + $8,000 + $3,500 +
$14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so there is a surplus of
$2,700. The checking account and credit card balances would be on the statement
of financial position.
