CRPC EXAM 2025/2026 UPDATE ACTUAL EXAM 150 QUESTIONS AND CORRECT
COMPREHENSIVE DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS)
|ALREADY GRADED A+
The costs not covered by either Part A or Part B of Medicare are referred to as Medicare
gaps or Medigaps.
Medigap insurance is designed to supplement Medicare's benefits by filling in some of
what Medicare does not cover. A Medigap policy pays for Medicare-approved charges that
are not paid by Medicare because of deductibles or coinsurance amounts for which the
beneficiary is responsible.
The cost and services covered by Medigap policies varies from vendor to vendor and from
plan to plan. Some, but not all, Medigap policies cover such items as Part D deductibles,
skilled nursing coinsurance amounts, and Medicare Part B excess amounts. LO 5-4
Assume a client and investment professional have worked together for several years.
Recently, the client's personal and financial circumstances have changed. According to
the course materials, what is the next asset management step that the investment
professional should take? A) gather data B) analyze information C) make and implement
recommendations D) monitor performance - ANSWER - When the client's circumstances
change, the asset management process goes back to the data gathering step in the
process. A LO 1-2
Assume that a worker's Social Security full retirement age is 66. What percentage of the
worker's full retirement age benefits will be paid to her at age 62?'
A) 65% B) 80% C) 50% D) 75% - ANSWER - D
A worker can begin receiving Social Security retirement benefits at age 62, but at a 25%
reduction from the full amount that would be received at full retirement age 66. The
percentage of this worker's full retirement age benefits that will be paid to her at age 62 is
75% [(5/9 of 1% per month for each of the first 36 months prior to full retirement age = 20%)
+ (5/12 of 1% * 12 months = 5%); 20% + 5% = 25%]. LO 3-2
Assume that you would receive $20,000/year at your FRA of 67. If you opted to instead
begin benefits at age 63 and 4 months, you would only receive 76.7% of your full benefit, or
$15,340/year or $1,278/month. - ANSWER - Calculation:
,67 - 63 = 4 years; 4 years is 48 months. However, you must subtract the 4 months since you
have been 63, so your reduction is 44 months.
5/9% x 36 = 20% reduction for the first 36 months (3 years) 5/12% x 8 = 3.3% reduction for
the next 8 months (44 months - 36 months)
Total Reduction = 23.3%; you would receive 76.7% of your PIA. This reduction would apply
to all future payments.
Assume the following asset classes have the correlations to long-term government bonds
shown below: Treasury bills:.12 Gold: -.25 Large stocks:.22 Small stocks:.17 Which one of
the following best exemplifies the impact of diversification on long-term government
bonds? - ANSWER - The asset with the lowest correlation provides the most diversification.
Therefore, gold provides more diversification than any of the other assets. Small stocks do
provide more diversification than Treasury bills, but
gold provides the most diversification, so it is the best option. LO 2-3
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?
A) $925 B) $875 C) $902 D) $1,010 - ANSWER - C
If the calculator is set for 1 P/YR, then all factors, other than FV, need to be adjusted for
semiannual payments. The keystrokes would be END 1,000 [FV], 25 [PMT], 5%=50/2=25 3
[I/YR], 30 [N], 15*2
then solve for [PV] = -902. If the calculator is set at 2 P/YR, then [I/YR] is 6 and [N] is entered
as 15 [SHIFTS] [N]. LO 2-8
Assume your client has the following portfolio: Stock Weight Beta BCD 40% 1.15 EFG
25% .90 HIJ 35% 1.05 What is the overall weighted beta for this portfolio? - ANSWER - .4 x
1.15 = .46; .25 x .90 = .23; .35 x 1.05 = .37.
Then,
.46 + .23 + .37 = 1.06. LO 2-3
Assuming the five-year holding period has been satisfied, which one of the following is not
a qualified distribution from a Roth IRA?
,A) a distribution made to an individual on or after age 59½ B) a distribution made to an
individual who retires on or after age 55 C) a distribution of earnings up to $10,000 made
for a first-time home purchase D) a distribution made to an IRA owner who is disabled -
ANSWER - B
Distributions from a Roth IRA will be either qualified or not qualified. A distribution is
qualified if the five-year holding period has been met and the distribution is made after the
attainment of age 59½, death, or disability, or if it is made to a first-time homebuyer for the
purchase of a home (limited to a maximum distribution of $10,000). A distribution made to
an individual who retires on or after age 55 is not a qualified distribution. LO 7-3
B - ANSWER - Over a period of 10 years, Mark contributed a total of $20,000 to a
nondeductible IRA. The current value of Mark's IRA is $50,000, and Mark, who is now age
45, has decided to use $30,000 of his IRA assets for the down payment on a second home.
Assuming Mark's marginal tax bracket is 22%, how much does he owe in taxes and
penalties? A) $9,600 B) $5,760 C) $3,960 D) $4,760 Explanation Mark's effective tax rate is
32%; i.e., 22% plus the 10% early withdrawal penalty. He has a basis of $20,000 out of
$50,000. Thus, 40% of the distribution will be tax-free, which means it is also penalty-free.
If 40% of the distribution is tax-free, then 60% is taxable and subject to the 10% EWP. 60%
of $30,000 is $18,000. 32% of $18,000 is $5,760. LO 7-3
Bill and Lisa Hahn have determined that they will need a monthly income of $6,000 during
retirement. They expect to receive Social Security retirement benefits amounting to $3,500
per month at the beginning of each month. Over the 12 remaining years of their
preretirement period, they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to assume a 6% annual
after-tax investment return compounded monthly. They want to start their monthly
retirement withdrawals on the first day they retire.
What is the lump sum needed at the beginning of retirement to fund this income stream? -
ANSWER - The monthly retirement income need is not specified as "today's dollars," and
no inflation rate specified; therefore, it must be assumed that the $2,500 net monthly
income need represents retirement dollars, and the retirement period income stream is
level. To calculate the lump sum needed at the beginning of retirement, discount the
stream of monthly income payments at the investment return rate: 10BII+ PVAD
calculation: Set calculator on BEG and 12 periods per year, then input the following: 2,500
[PMT] 25 [SHIFT] [N] 6 [I/YR] 0 [FV] Solve for PV = $389,957 LO 1-4
, Charles turns 73 this year. His IRA was worth $100,000 at the end of last year. What is his
RMD for this year? (The Uniform Table factor is 27.4 at age 73.)
A) $5,501 B) $3,774 C) $3,650 D) $3,906 - ANSWER - C
$100,000/ 27.4 = $3,650. LO 7-3
Charlie contributed $2,000 to Roth IRA 1 last year, when he was age 24, and $2,000 to Roth
IRA 2 this year. Two years from now, Roth IRA 1 will have a balance of $2,650, and Roth IRA
2 will have a balance of $2,590, and Charlie will close Roth IRA 1, receiving the balance of
$2,650. Which one of the following statements best describes his tax and penalty status
for that year?
A) He only pays ordinary taxes because Roth IRA distributions are not subject to a penalty.
B) He cannot make any withdrawals because the money has not been in the Roth IRA for
five years or longer. C) He will not pay taxes or a penalty. D) He must pay taxes and a
penalty on the full distribution. - ANSWER - C
The distribution is not qualified because Charlie is underage 59½, not disabled, not dead,
or not making a first-time home purchase and he is withdrawing the money before the
waiting period of five tax years. Withdrawals within five years are not prohibited, but
taxation may occur, and penalties may apply in some cases. None of this withdrawal,
however, is included in Charlie's taxable income because the $2,650 sum is less than the
aggregate total of his contributions ($4,000). Also, no penalty applies because the
withdrawal is accounted for as coming from his contributions. LO 7-3
Charlie contributed $2,000 to Roth IRA 1 last year, when he was age 24, and $2,000 to Roth
IRA 2 this year. Two years from now, Roth IRA 1 will have a balance of $2,650, and Roth IRA
2 will have a balance of $2,590, and Charlie will close Roth IRA 1, receiving the balance of
$2,650. Which one of the following statements best describes his tax and penalty status
for that year?
A) He only pays ordinary taxes because Roth IRA distributions are not subject to a penalty.
B) He must pay taxes and a penalty on the full distribution. C) He cannot make any
withdrawals because the money has not been in the Roth IRA for five years or longer. D) He
will pay neither taxes nor a penalty. - ANSWER - D
The distribution is not qualified because Charlie is underage 59½ and he is withdrawing the
money before the waiting period of five tax years. None of the withdrawal, however, is
included in Charlie's taxable income because the $2,650 sum is less than the aggregate
COMPREHENSIVE DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS)
|ALREADY GRADED A+
The costs not covered by either Part A or Part B of Medicare are referred to as Medicare
gaps or Medigaps.
Medigap insurance is designed to supplement Medicare's benefits by filling in some of
what Medicare does not cover. A Medigap policy pays for Medicare-approved charges that
are not paid by Medicare because of deductibles or coinsurance amounts for which the
beneficiary is responsible.
The cost and services covered by Medigap policies varies from vendor to vendor and from
plan to plan. Some, but not all, Medigap policies cover such items as Part D deductibles,
skilled nursing coinsurance amounts, and Medicare Part B excess amounts. LO 5-4
Assume a client and investment professional have worked together for several years.
Recently, the client's personal and financial circumstances have changed. According to
the course materials, what is the next asset management step that the investment
professional should take? A) gather data B) analyze information C) make and implement
recommendations D) monitor performance - ANSWER - When the client's circumstances
change, the asset management process goes back to the data gathering step in the
process. A LO 1-2
Assume that a worker's Social Security full retirement age is 66. What percentage of the
worker's full retirement age benefits will be paid to her at age 62?'
A) 65% B) 80% C) 50% D) 75% - ANSWER - D
A worker can begin receiving Social Security retirement benefits at age 62, but at a 25%
reduction from the full amount that would be received at full retirement age 66. The
percentage of this worker's full retirement age benefits that will be paid to her at age 62 is
75% [(5/9 of 1% per month for each of the first 36 months prior to full retirement age = 20%)
+ (5/12 of 1% * 12 months = 5%); 20% + 5% = 25%]. LO 3-2
Assume that you would receive $20,000/year at your FRA of 67. If you opted to instead
begin benefits at age 63 and 4 months, you would only receive 76.7% of your full benefit, or
$15,340/year or $1,278/month. - ANSWER - Calculation:
,67 - 63 = 4 years; 4 years is 48 months. However, you must subtract the 4 months since you
have been 63, so your reduction is 44 months.
5/9% x 36 = 20% reduction for the first 36 months (3 years) 5/12% x 8 = 3.3% reduction for
the next 8 months (44 months - 36 months)
Total Reduction = 23.3%; you would receive 76.7% of your PIA. This reduction would apply
to all future payments.
Assume the following asset classes have the correlations to long-term government bonds
shown below: Treasury bills:.12 Gold: -.25 Large stocks:.22 Small stocks:.17 Which one of
the following best exemplifies the impact of diversification on long-term government
bonds? - ANSWER - The asset with the lowest correlation provides the most diversification.
Therefore, gold provides more diversification than any of the other assets. Small stocks do
provide more diversification than Treasury bills, but
gold provides the most diversification, so it is the best option. LO 2-3
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?
A) $925 B) $875 C) $902 D) $1,010 - ANSWER - C
If the calculator is set for 1 P/YR, then all factors, other than FV, need to be adjusted for
semiannual payments. The keystrokes would be END 1,000 [FV], 25 [PMT], 5%=50/2=25 3
[I/YR], 30 [N], 15*2
then solve for [PV] = -902. If the calculator is set at 2 P/YR, then [I/YR] is 6 and [N] is entered
as 15 [SHIFTS] [N]. LO 2-8
Assume your client has the following portfolio: Stock Weight Beta BCD 40% 1.15 EFG
25% .90 HIJ 35% 1.05 What is the overall weighted beta for this portfolio? - ANSWER - .4 x
1.15 = .46; .25 x .90 = .23; .35 x 1.05 = .37.
Then,
.46 + .23 + .37 = 1.06. LO 2-3
Assuming the five-year holding period has been satisfied, which one of the following is not
a qualified distribution from a Roth IRA?
,A) a distribution made to an individual on or after age 59½ B) a distribution made to an
individual who retires on or after age 55 C) a distribution of earnings up to $10,000 made
for a first-time home purchase D) a distribution made to an IRA owner who is disabled -
ANSWER - B
Distributions from a Roth IRA will be either qualified or not qualified. A distribution is
qualified if the five-year holding period has been met and the distribution is made after the
attainment of age 59½, death, or disability, or if it is made to a first-time homebuyer for the
purchase of a home (limited to a maximum distribution of $10,000). A distribution made to
an individual who retires on or after age 55 is not a qualified distribution. LO 7-3
B - ANSWER - Over a period of 10 years, Mark contributed a total of $20,000 to a
nondeductible IRA. The current value of Mark's IRA is $50,000, and Mark, who is now age
45, has decided to use $30,000 of his IRA assets for the down payment on a second home.
Assuming Mark's marginal tax bracket is 22%, how much does he owe in taxes and
penalties? A) $9,600 B) $5,760 C) $3,960 D) $4,760 Explanation Mark's effective tax rate is
32%; i.e., 22% plus the 10% early withdrawal penalty. He has a basis of $20,000 out of
$50,000. Thus, 40% of the distribution will be tax-free, which means it is also penalty-free.
If 40% of the distribution is tax-free, then 60% is taxable and subject to the 10% EWP. 60%
of $30,000 is $18,000. 32% of $18,000 is $5,760. LO 7-3
Bill and Lisa Hahn have determined that they will need a monthly income of $6,000 during
retirement. They expect to receive Social Security retirement benefits amounting to $3,500
per month at the beginning of each month. Over the 12 remaining years of their
preretirement period, they expect to generate an average annual after-tax investment
return of 8%; during their 25-year retirement period, they want to assume a 6% annual
after-tax investment return compounded monthly. They want to start their monthly
retirement withdrawals on the first day they retire.
What is the lump sum needed at the beginning of retirement to fund this income stream? -
ANSWER - The monthly retirement income need is not specified as "today's dollars," and
no inflation rate specified; therefore, it must be assumed that the $2,500 net monthly
income need represents retirement dollars, and the retirement period income stream is
level. To calculate the lump sum needed at the beginning of retirement, discount the
stream of monthly income payments at the investment return rate: 10BII+ PVAD
calculation: Set calculator on BEG and 12 periods per year, then input the following: 2,500
[PMT] 25 [SHIFT] [N] 6 [I/YR] 0 [FV] Solve for PV = $389,957 LO 1-4
, Charles turns 73 this year. His IRA was worth $100,000 at the end of last year. What is his
RMD for this year? (The Uniform Table factor is 27.4 at age 73.)
A) $5,501 B) $3,774 C) $3,650 D) $3,906 - ANSWER - C
$100,000/ 27.4 = $3,650. LO 7-3
Charlie contributed $2,000 to Roth IRA 1 last year, when he was age 24, and $2,000 to Roth
IRA 2 this year. Two years from now, Roth IRA 1 will have a balance of $2,650, and Roth IRA
2 will have a balance of $2,590, and Charlie will close Roth IRA 1, receiving the balance of
$2,650. Which one of the following statements best describes his tax and penalty status
for that year?
A) He only pays ordinary taxes because Roth IRA distributions are not subject to a penalty.
B) He cannot make any withdrawals because the money has not been in the Roth IRA for
five years or longer. C) He will not pay taxes or a penalty. D) He must pay taxes and a
penalty on the full distribution. - ANSWER - C
The distribution is not qualified because Charlie is underage 59½, not disabled, not dead,
or not making a first-time home purchase and he is withdrawing the money before the
waiting period of five tax years. Withdrawals within five years are not prohibited, but
taxation may occur, and penalties may apply in some cases. None of this withdrawal,
however, is included in Charlie's taxable income because the $2,650 sum is less than the
aggregate total of his contributions ($4,000). Also, no penalty applies because the
withdrawal is accounted for as coming from his contributions. LO 7-3
Charlie contributed $2,000 to Roth IRA 1 last year, when he was age 24, and $2,000 to Roth
IRA 2 this year. Two years from now, Roth IRA 1 will have a balance of $2,650, and Roth IRA
2 will have a balance of $2,590, and Charlie will close Roth IRA 1, receiving the balance of
$2,650. Which one of the following statements best describes his tax and penalty status
for that year?
A) He only pays ordinary taxes because Roth IRA distributions are not subject to a penalty.
B) He must pay taxes and a penalty on the full distribution. C) He cannot make any
withdrawals because the money has not been in the Roth IRA for five years or longer. D) He
will pay neither taxes nor a penalty. - ANSWER - D
The distribution is not qualified because Charlie is underage 59½ and he is withdrawing the
money before the waiting period of five tax years. None of the withdrawal, however, is
included in Charlie's taxable income because the $2,650 sum is less than the aggregate
