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Multiple Choice and Conceptual Actual
Emended Exam Questions With Reviewed
100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. What is the future value of $10,000 invested today for 5 years at an annual
interest rate of 6%, compounded annually?
A) $12,000
B) $13,382
C) $13,000
D) $11,200
Correct answer: B
2. Which one of the following is the most immediate effect of a contribution
to a deductible IRA?
A) tax reduction
B) tax deferral
C) income conversion
D) tax avoidance
Correct answer: A
3. Your clients, John and Mary, are in the 24% marginal tax rate, have a 19.4%
average tax rate, and a taxable income of $250,000, before receiving a year-
end bonus. For a married couple filing a joint return, the 24% marginal rate
applies to taxable income between $172,751 and $329,850 in 2022. If Mary
receives a year-end bonus of $50,000, what will be their average tax rate
, after the bonus?
A) 19.4%
B) 20.2%
C) 22.2%
D) 24.0% Correct answer: B
4. Alex Birch inherited 500 shares of stock from his aunt Winifred. Winifred
had purchased half the stock nine years ago for $17 per share, and the
remainder six years ago for $23 per share. The stock price had declined to
$10 per share when Winifred died.
What is Alex's per share basis in the stock, assuming that he sells it five
years later for $16 per share?
A) $10
B) $23
C) $17
D) $20 Correct answer: A
5. William Franks sold a collection of rare diamonds during the current tax
year. William has a taxable income of approximately $500,000, exclusive of
the diamond sale.
What is the maximum tax rate that may apply to the sale of the diamond
collection?
A) 5%
B) 18%
C) 28%
D) 35% Correct answer: C
6. If a client wants to accumulate $50,000 in 10 years and can earn 5% annually,
how much must they invest today?
,A) $30,695
B) $31,500
C) $32,625
D) $33,850
Correct answer: A
7. Which of the following correctly describes the structure of a personal balance
sheet?
A) Income – Expenses = Net Worth
B) Assets – Liabilities = Net Worth
C) Income + Liabilities = Cash Flow
D) Assets + Liabilities = Net Worth
Correct answer: B
8. On a cash flow statement, discretionary expenses include:
A) Mortgage payments
B) Taxes
C) Utilities
D) Vacation spending
Correct answer: D
9. What is the first step in the CFP Board’s 7-step financial planning process?
A) Develop the financial plan
B) Analyze the client’s current financial status
C) Establish and define the client-planner relationship
D) Present the financial planning recommendations
Correct answer: C
10. During which phase does the planner identify a client’s personal and financial
goals, needs, and priorities?
A) Data gathering
B) Plan presentation
C) Relationship agreement
D) Monitoring
Correct answer: A
, 11. According to the CFP Board’s Code of Ethics, a planner must always:
A) Recommend the product that pays the highest commission
B) Put the client’s interests ahead of their own
C) Minimize taxes at all costs
D) Guarantee investment returns
Correct answer: B
12. If a CFP professional is found guilty of a felony related to dishonesty, what is
the likely CFP Board action?
A) Temporary suspension of certification
B) Reprimand and fine
C) Permanent revocation of certification
D) No action
Correct answer: C
13. Which of the following risks is best mitigated through insurance?
A) Market risk
B) Interest rate risk
C) Disability risk
D) Inflation risk
Correct answer: C
14. What is the first step in the risk management process?
A) Transfer the risk
B) Purchase insurance
C) Identify the risk
D) Measure the risk
Correct answer: C
15. A client refuses to sell a losing stock to avoid realizing a loss. This is an example
of:
A) Overconfidence bias
B) Anchoring
Multiple Choice and Conceptual Actual
Emended Exam Questions With Reviewed
100% Correct Detailed Answers
Guaranteed Pass!!Current Update
1. What is the future value of $10,000 invested today for 5 years at an annual
interest rate of 6%, compounded annually?
A) $12,000
B) $13,382
C) $13,000
D) $11,200
Correct answer: B
2. Which one of the following is the most immediate effect of a contribution
to a deductible IRA?
A) tax reduction
B) tax deferral
C) income conversion
D) tax avoidance
Correct answer: A
3. Your clients, John and Mary, are in the 24% marginal tax rate, have a 19.4%
average tax rate, and a taxable income of $250,000, before receiving a year-
end bonus. For a married couple filing a joint return, the 24% marginal rate
applies to taxable income between $172,751 and $329,850 in 2022. If Mary
receives a year-end bonus of $50,000, what will be their average tax rate
, after the bonus?
A) 19.4%
B) 20.2%
C) 22.2%
D) 24.0% Correct answer: B
4. Alex Birch inherited 500 shares of stock from his aunt Winifred. Winifred
had purchased half the stock nine years ago for $17 per share, and the
remainder six years ago for $23 per share. The stock price had declined to
$10 per share when Winifred died.
What is Alex's per share basis in the stock, assuming that he sells it five
years later for $16 per share?
A) $10
B) $23
C) $17
D) $20 Correct answer: A
5. William Franks sold a collection of rare diamonds during the current tax
year. William has a taxable income of approximately $500,000, exclusive of
the diamond sale.
What is the maximum tax rate that may apply to the sale of the diamond
collection?
A) 5%
B) 18%
C) 28%
D) 35% Correct answer: C
6. If a client wants to accumulate $50,000 in 10 years and can earn 5% annually,
how much must they invest today?
,A) $30,695
B) $31,500
C) $32,625
D) $33,850
Correct answer: A
7. Which of the following correctly describes the structure of a personal balance
sheet?
A) Income – Expenses = Net Worth
B) Assets – Liabilities = Net Worth
C) Income + Liabilities = Cash Flow
D) Assets + Liabilities = Net Worth
Correct answer: B
8. On a cash flow statement, discretionary expenses include:
A) Mortgage payments
B) Taxes
C) Utilities
D) Vacation spending
Correct answer: D
9. What is the first step in the CFP Board’s 7-step financial planning process?
A) Develop the financial plan
B) Analyze the client’s current financial status
C) Establish and define the client-planner relationship
D) Present the financial planning recommendations
Correct answer: C
10. During which phase does the planner identify a client’s personal and financial
goals, needs, and priorities?
A) Data gathering
B) Plan presentation
C) Relationship agreement
D) Monitoring
Correct answer: A
, 11. According to the CFP Board’s Code of Ethics, a planner must always:
A) Recommend the product that pays the highest commission
B) Put the client’s interests ahead of their own
C) Minimize taxes at all costs
D) Guarantee investment returns
Correct answer: B
12. If a CFP professional is found guilty of a felony related to dishonesty, what is
the likely CFP Board action?
A) Temporary suspension of certification
B) Reprimand and fine
C) Permanent revocation of certification
D) No action
Correct answer: C
13. Which of the following risks is best mitigated through insurance?
A) Market risk
B) Interest rate risk
C) Disability risk
D) Inflation risk
Correct answer: C
14. What is the first step in the risk management process?
A) Transfer the risk
B) Purchase insurance
C) Identify the risk
D) Measure the risk
Correct answer: C
15. A client refuses to sell a losing stock to avoid realizing a loss. This is an example
of:
A) Overconfidence bias
B) Anchoring
