Financial Planning: Process and
Environment Practice Test ACTUAL
QUESTIONS AND CORRECT ANSWERS
Which of the following financial planning domains is where the advisoridentifies the
strengths and weaknesses in the client's present financial condition?
(A) Establish and define the advisor-client relationship.
(B) Determine goals and gather data.
(C) Develop and present a plan.
(D) Analyze and evaluate the data. CORRECT ANSWERS✅✅(D) Analyze and evaluate the
data.
Which of the following types of questions is likely to be the most effective in client
counseling?
(A) Open-ended
(B) Close-ended
(C) Leading
(D) Either/or CORRECT ANSWERS✅✅(A) Open-ended
Which of the following statements concerning ethics in business is correct?
(A) It is good public relations for a business.
(B) It is about creating a good image for a business.
(C) It is a luxury to indulge in after meeting the bottom line.
(D) It is about how people conduct business every day. CORRECT ANSWERS✅✅(D) It is
about how people conduct business every day.
If $100 is deposited today in an account paying 9 percent compoundannual interest, how
much will be in the account at the end of 4 years?
,(A) $70.84
(B) $141.16
(C) $323.97
(D) $457.31 CORRECT ANSWERS✅✅(B) $141.16
If Bob deposits $8,000 today in an account that pays 3 percent compound annual interest,
how long will it take for the account to reach $10,000?
(A) 3.77 years
(B) 4.58 years
(C) 6.12 years
(D) 7.55 years CORRECT ANSWERS✅✅(D) 7.55 years
For SEC registration purposes, which of the following acts sets the limit for assets under
management?
(A) Sarbanes-Oxley Act
(B) Investment Advisers Supervision Coordination Act
(C) Investment Advisers Act
(D) Securities Exchange Act CORRECT ANSWERS✅✅(B) Investment Advisers
Supervision Coordination Act
Which of the following is an appropriate investment for an emergency fund?
(A) A money market mutual fund
(B) Bonds
(C) Real estate
(D) Life insurance CORRECT ANSWERS✅✅(A) A money market mutual fund
Assume that payments of $1,000 are to be received at the end of each of the next 5 years. On
the basis of a 9 percent compound annual interest assumption, what is the series of payments
worth today?
,(A) $649.93
(B) $1,538.58
(C) $3,889.65
(D) $5,984.71 CORRECT ANSWERS✅✅(C) $3,889.65
How much money do you need to deposit today in a savings account earning 9 percent
compound annual interest if your goal is to accumulate $10,000 at the end of 4 years?
(A) $3,086.71
(B) $7,084.25
(C) $7,721.83
(D) $14,115.82 CORRECT ANSWERS✅✅(B) $7,084.25
Jim needs to accumulate $25,000 in a savings account over the next 5 years. He can make
five annual deposits of $4,000 starting today. What compound annual rate of return must the
account earn in order for Jim to meet his goal?
(A) 5.00%
(B) 6.12%
(C) 6.67%
(D) 7.53% CORRECT ANSWERS✅✅(D) 7.53%
Bill expects to receive $10,000 each year for 4 years beginning one year from today. If Bill
can earn 6 percent compound annual interest on these funds, what is the present value of this
series of payments?
(A) $34,651.06
(B) $36,298.95
(C) $49,173.24
(D) $52,421.37 CORRECT ANSWERS✅✅(A) $34,651.06
, If $1,000 is deposited into a savings account at the beginning of each of the next 4 years
starting today, how much money will be in the account 4 years from now if no withdrawals
are made and the account earns 9 percent compound annual interest?
(A) $3,239.72
(B) $3,531.29
(C) $4,573.13
(D) $4,984.71 CORRECT ANSWERS✅✅(D) $4,984.71
What is the yield to maturity of a $1,000 face amount bond that currently sells for $875, pays
$60 of interest at the end of each year, and matures in 10 years?
(A) 7.85%
(B) 8.75%
(C) 9.35%
(D) 10.00% CORRECT ANSWERS✅✅(A) 7.85%
According to a consumer survey conducted by the CFP® Board of Standards,the top reason
why people begin financial planning is to...
(A) Accumulate capital
(B) Purchase or renovate a home
(C) Build and liquidate a retirement fund
(D) Divorce planning CORRECT ANSWERS✅✅(C) Build and liquidate a retirement fund
Which of the following financial planning domains is where the advisorreviews changes in
the client's circumstances and the financial environment?
(A) Implement the plan.
(B) Monitor the plan.
(C) Establish and define the advisor-client relationship.
(D) Determine goals and gather dat CORRECT ANSWERS✅✅(B) Monitor the plan.
Environment Practice Test ACTUAL
QUESTIONS AND CORRECT ANSWERS
Which of the following financial planning domains is where the advisoridentifies the
strengths and weaknesses in the client's present financial condition?
(A) Establish and define the advisor-client relationship.
(B) Determine goals and gather data.
(C) Develop and present a plan.
(D) Analyze and evaluate the data. CORRECT ANSWERS✅✅(D) Analyze and evaluate the
data.
Which of the following types of questions is likely to be the most effective in client
counseling?
(A) Open-ended
(B) Close-ended
(C) Leading
(D) Either/or CORRECT ANSWERS✅✅(A) Open-ended
Which of the following statements concerning ethics in business is correct?
(A) It is good public relations for a business.
(B) It is about creating a good image for a business.
(C) It is a luxury to indulge in after meeting the bottom line.
(D) It is about how people conduct business every day. CORRECT ANSWERS✅✅(D) It is
about how people conduct business every day.
If $100 is deposited today in an account paying 9 percent compoundannual interest, how
much will be in the account at the end of 4 years?
,(A) $70.84
(B) $141.16
(C) $323.97
(D) $457.31 CORRECT ANSWERS✅✅(B) $141.16
If Bob deposits $8,000 today in an account that pays 3 percent compound annual interest,
how long will it take for the account to reach $10,000?
(A) 3.77 years
(B) 4.58 years
(C) 6.12 years
(D) 7.55 years CORRECT ANSWERS✅✅(D) 7.55 years
For SEC registration purposes, which of the following acts sets the limit for assets under
management?
(A) Sarbanes-Oxley Act
(B) Investment Advisers Supervision Coordination Act
(C) Investment Advisers Act
(D) Securities Exchange Act CORRECT ANSWERS✅✅(B) Investment Advisers
Supervision Coordination Act
Which of the following is an appropriate investment for an emergency fund?
(A) A money market mutual fund
(B) Bonds
(C) Real estate
(D) Life insurance CORRECT ANSWERS✅✅(A) A money market mutual fund
Assume that payments of $1,000 are to be received at the end of each of the next 5 years. On
the basis of a 9 percent compound annual interest assumption, what is the series of payments
worth today?
,(A) $649.93
(B) $1,538.58
(C) $3,889.65
(D) $5,984.71 CORRECT ANSWERS✅✅(C) $3,889.65
How much money do you need to deposit today in a savings account earning 9 percent
compound annual interest if your goal is to accumulate $10,000 at the end of 4 years?
(A) $3,086.71
(B) $7,084.25
(C) $7,721.83
(D) $14,115.82 CORRECT ANSWERS✅✅(B) $7,084.25
Jim needs to accumulate $25,000 in a savings account over the next 5 years. He can make
five annual deposits of $4,000 starting today. What compound annual rate of return must the
account earn in order for Jim to meet his goal?
(A) 5.00%
(B) 6.12%
(C) 6.67%
(D) 7.53% CORRECT ANSWERS✅✅(D) 7.53%
Bill expects to receive $10,000 each year for 4 years beginning one year from today. If Bill
can earn 6 percent compound annual interest on these funds, what is the present value of this
series of payments?
(A) $34,651.06
(B) $36,298.95
(C) $49,173.24
(D) $52,421.37 CORRECT ANSWERS✅✅(A) $34,651.06
, If $1,000 is deposited into a savings account at the beginning of each of the next 4 years
starting today, how much money will be in the account 4 years from now if no withdrawals
are made and the account earns 9 percent compound annual interest?
(A) $3,239.72
(B) $3,531.29
(C) $4,573.13
(D) $4,984.71 CORRECT ANSWERS✅✅(D) $4,984.71
What is the yield to maturity of a $1,000 face amount bond that currently sells for $875, pays
$60 of interest at the end of each year, and matures in 10 years?
(A) 7.85%
(B) 8.75%
(C) 9.35%
(D) 10.00% CORRECT ANSWERS✅✅(A) 7.85%
According to a consumer survey conducted by the CFP® Board of Standards,the top reason
why people begin financial planning is to...
(A) Accumulate capital
(B) Purchase or renovate a home
(C) Build and liquidate a retirement fund
(D) Divorce planning CORRECT ANSWERS✅✅(C) Build and liquidate a retirement fund
Which of the following financial planning domains is where the advisorreviews changes in
the client's circumstances and the financial environment?
(A) Implement the plan.
(B) Monitor the plan.
(C) Establish and define the advisor-client relationship.
(D) Determine goals and gather dat CORRECT ANSWERS✅✅(B) Monitor the plan.
