CRPC YOU GOT THIS STUDY CARDS
CERTIFICATION REVIEW SET 2026
QUESTIONS WITH ANSWERS GRADED A+
⫸ 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
⫸ Social Security- currently insured Answer: - individual must has at
least 6 quarters of coverage in the 13-quarter period proceeding the
event for which eligibility is sought
, - child's benefit, mother/fathers benefits, and lump-sum death benefit are
available if a worker is only currently insured at death
⫸ Components of SS calculation Answer: - age he starts
- earnings history
⫸ SS calculation before full retirement age Answer: - Payment reduced
by 5/9th of 1% for each month filed before FRA, up to 36 months
- Payment is reduced by 5/12ths of 1% for each month filed early in
excess of 36 months
⫸ SS calculation after full retirement age Answer: - Payment increases
by about 8% each year they delay, until maximum year 70
- actual math is 2/3 for each month
⫸ Social Security milestones Answer: Ages
50: disabled survivors can start receiving benefits
60: nondisabled survivors can start receiving
62: earliest one can start receiving benefits at reduced rate
65-67: FRA, depending on birth year
70: delayed retirement age
⫸ Social Security income cap Answer: $15,720
CERTIFICATION REVIEW SET 2026
QUESTIONS WITH ANSWERS GRADED A+
⫸ 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
⫸ Social Security- currently insured Answer: - individual must has at
least 6 quarters of coverage in the 13-quarter period proceeding the
event for which eligibility is sought
, - child's benefit, mother/fathers benefits, and lump-sum death benefit are
available if a worker is only currently insured at death
⫸ Components of SS calculation Answer: - age he starts
- earnings history
⫸ SS calculation before full retirement age Answer: - Payment reduced
by 5/9th of 1% for each month filed before FRA, up to 36 months
- Payment is reduced by 5/12ths of 1% for each month filed early in
excess of 36 months
⫸ SS calculation after full retirement age Answer: - Payment increases
by about 8% each year they delay, until maximum year 70
- actual math is 2/3 for each month
⫸ Social Security milestones Answer: Ages
50: disabled survivors can start receiving benefits
60: nondisabled survivors can start receiving
62: earliest one can start receiving benefits at reduced rate
65-67: FRA, depending on birth year
70: delayed retirement age
⫸ Social Security income cap Answer: $15,720
