3/27/25, 8:52 CRPC Practice Exam #2 Flashcards |
AM
CRPC PRACTICE EXAM #2 EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED
Terms in this set (58)
Step One - Set the calculator to BEGIN.
Richard wants to have an annual
retirement income of $100,000 (payable
Step Two - Calculate the inflation adjusted rate of return (One plus the Rate of
at the
Return divided by One plus the interest rate, minus one, multiplied by 100 = the
beginning of each year) protected against
inflation adjusted rate of return) Put this number in the I/YR
3% inflation.
Step Three - 100,000 goes in as a PMT
Assuming a 7% after-tax rate of return and
a retirement period of 30 years, how much
Step Four - 30 goes in as N
money does Richard need in order to meet
his goal?
Step Five -Press PV
Explain how you need to input this on the
Richard needs $1,822,042.88 in today's dollars to meet his needs.
calculator and why.
1 plus the Rate of
Return Divided by
How do you calculate the inflation-
1 plus the interest rate
adjusted rate of return?
minus one
multiplied by 100
1/
6
, 3/27/25, 8:52 CRPC Practice Exam #2 Flashcards |
AM
Step One - The problem says END in it so you have to set your calculator to the END
mode.
Step two - Enter the $40000 as a PMT
Tom has been promised a stream of
$40,000 annual payments at the end of
Step Three - Enter 25 as the N.
each year for 25 years. The present value
of these payments discounted at a rate of
Step Four - Enter 5 as the I/R
5% is which one of the following
amounts?
Step Six - Hit PV.
$563,758
Nick wants to maintain the purchasing If you know the Rule of 72, and you divide 3.5 into 72, you arrive at the number 20,
power of $75,000 (in today's dollars) in which is the number of years it will take for a sum to double. With a calculator,
retirement. If inflation continues to average you can solve for the future value of $75,000 over 20 years at 3.5%.
3.5%, approximately what amount will Nick Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
need in 20 years to equal the
purchasing power of $75,000 today?
(Round your answer.)
What is the second step in the The second step in the retirement planning process is to gather client data,
retirement planning process? including goals and expectations
What is the first step in the retirement The first step is to establish and define the client-counselor relationship which
planning process? includes disclosing the counselor's compensation arrangement
The increase in principal is taxable each year. Any annual increase in principal is
What is a characteristic of a TIP? subject to federal taxation (unless in a tax-deferred account). Returns are tied to the
consumer price index. TIPS are sold at par value and have maturities up to 30 years.
How you calculate the weighted beta of a You multiply the weight times the beta for each stock, then you add those numbers
portfolio? up together.
The percentage a manager over or underperformed based on the amount of risk
What does Jensen's alpha tell you
taken.
Moving averages, graphs and statistics Technical analysis.
regarding the supply and demand of stocks
are an example of what kind of
analysis?
Financial statement ratios are part of what Fundamental analysis.
kind of analysis?
The coupon rate is annualized but paid semiannually for U.S. bonds. The face value
When performing bond calculations, what
of the bond should be assumed to be $1,000, not $10,000. The coupon rate is stated
general assumptions should be made
on an annual basis but is assumed to be paid semiannually for U.S. bonds and the
unless stated otherwise?
coupon payment is always made at the end of the period, not the beginning.
Which is correct regarding the additional The tax was designed to provide additional funding for Medicare. This tax is an
payroll tax for high wage earners that was additional Medicare tax. The 0.9% tax is employee paid and applies to high earners
brought about by the Patient Protection only.
and Affordable Care Act
A worker can begin receiving Social Security retirement benefits at age 62, but at a
Assume that a worker's Social Security
25% reduction from the full amount that would be received at full retirement age
full retirement age is 66. What
66. So 100% benefits minus the reduction of 25% = 75%.
percentage of the worker's full retirement
age benefits will be paid to her at age
Remember 62 = 25% reduction!
62?
2/
6
AM
CRPC PRACTICE EXAM #2 EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED
Terms in this set (58)
Step One - Set the calculator to BEGIN.
Richard wants to have an annual
retirement income of $100,000 (payable
Step Two - Calculate the inflation adjusted rate of return (One plus the Rate of
at the
Return divided by One plus the interest rate, minus one, multiplied by 100 = the
beginning of each year) protected against
inflation adjusted rate of return) Put this number in the I/YR
3% inflation.
Step Three - 100,000 goes in as a PMT
Assuming a 7% after-tax rate of return and
a retirement period of 30 years, how much
Step Four - 30 goes in as N
money does Richard need in order to meet
his goal?
Step Five -Press PV
Explain how you need to input this on the
Richard needs $1,822,042.88 in today's dollars to meet his needs.
calculator and why.
1 plus the Rate of
Return Divided by
How do you calculate the inflation-
1 plus the interest rate
adjusted rate of return?
minus one
multiplied by 100
1/
6
, 3/27/25, 8:52 CRPC Practice Exam #2 Flashcards |
AM
Step One - The problem says END in it so you have to set your calculator to the END
mode.
Step two - Enter the $40000 as a PMT
Tom has been promised a stream of
$40,000 annual payments at the end of
Step Three - Enter 25 as the N.
each year for 25 years. The present value
of these payments discounted at a rate of
Step Four - Enter 5 as the I/R
5% is which one of the following
amounts?
Step Six - Hit PV.
$563,758
Nick wants to maintain the purchasing If you know the Rule of 72, and you divide 3.5 into 72, you arrive at the number 20,
power of $75,000 (in today's dollars) in which is the number of years it will take for a sum to double. With a calculator,
retirement. If inflation continues to average you can solve for the future value of $75,000 over 20 years at 3.5%.
3.5%, approximately what amount will Nick Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded = $150,000
need in 20 years to equal the
purchasing power of $75,000 today?
(Round your answer.)
What is the second step in the The second step in the retirement planning process is to gather client data,
retirement planning process? including goals and expectations
What is the first step in the retirement The first step is to establish and define the client-counselor relationship which
planning process? includes disclosing the counselor's compensation arrangement
The increase in principal is taxable each year. Any annual increase in principal is
What is a characteristic of a TIP? subject to federal taxation (unless in a tax-deferred account). Returns are tied to the
consumer price index. TIPS are sold at par value and have maturities up to 30 years.
How you calculate the weighted beta of a You multiply the weight times the beta for each stock, then you add those numbers
portfolio? up together.
The percentage a manager over or underperformed based on the amount of risk
What does Jensen's alpha tell you
taken.
Moving averages, graphs and statistics Technical analysis.
regarding the supply and demand of stocks
are an example of what kind of
analysis?
Financial statement ratios are part of what Fundamental analysis.
kind of analysis?
The coupon rate is annualized but paid semiannually for U.S. bonds. The face value
When performing bond calculations, what
of the bond should be assumed to be $1,000, not $10,000. The coupon rate is stated
general assumptions should be made
on an annual basis but is assumed to be paid semiannually for U.S. bonds and the
unless stated otherwise?
coupon payment is always made at the end of the period, not the beginning.
Which is correct regarding the additional The tax was designed to provide additional funding for Medicare. This tax is an
payroll tax for high wage earners that was additional Medicare tax. The 0.9% tax is employee paid and applies to high earners
brought about by the Patient Protection only.
and Affordable Care Act
A worker can begin receiving Social Security retirement benefits at age 62, but at a
Assume that a worker's Social Security
25% reduction from the full amount that would be received at full retirement age
full retirement age is 66. What
66. So 100% benefits minus the reduction of 25% = 75%.
percentage of the worker's full retirement
age benefits will be paid to her at age
Remember 62 = 25% reduction!
62?
2/
6
