FREE Ultimate Certified Financial Planner Questions and Answers

Question 1

Which of the following combinations of investments would present the lowest risk to a female retiree 72 years old while still providing her with a respectable inflation hedge for her 15 year life expectancy, according to Modern Portfolio Theory?

Accepted Answer

40% Stock, 50% Bonds, 10% Cash

Answer

15% Stock, 75% Cash, 10% Cryptocurrency

Answer

90% Bonds, 10% Cash

Answer

100% Cash

Question 2

Megs wants to sell her Xf Automotive (an electric car firm) stock to lock in a profit, but she fears that due to company-specific risk, it may soon suffer a significant decline. If she thinks electric cars will be around in the future, she should:

Accepted Answer

Establish a bullish call spread position on Xf Automotive.

Answer

Sell her Xf Automotive and then buy more of it in two weeks after it crashes with a new lower basis.

Answer

Buy more Xf Automotive in a margin account.

Answer

Sell her Xf Automotive stock and buy an ETF with a green vehicle focus.

Question 3

At the time of his mother's passing in 2025, Kenneth will receive her whole estate, which is an investment portfolio of individual stocks, valued at $1,250,000. No previous gifts had been given. For $50,000, she had spent the 1980s to acquire these stocks. How much tax does Kenneth owe if he sells the securities for $1,300,000 nine months after receiving them, presuming there are no state capital gains taxes or inheritance taxes? Let's say that Kenneth is single, has an annual salary of $300,000, and no dividends were given.

Accepted Answer

$7,500 in Capital Gains tax

Answer

$250,000 in Capital Gains tax

Answer

Estate Tax of $370,000

Answer

Kenneth does not owe any taxes

Question 4

Thor, 25, works as an engineer for a Fortune 500 company and makes $92,000 each year. He has been there for three years. Loki contributes 9% of his salary, with the first 4% matched dollar for dollar. Which of the following, assuming all net returns after expenses and fees are equal at 8% per year over the accumulation time period and that he can contribute $4,000 per year into any of the alternatives, will produce the highest after-tax income at age 65?

Accepted Answer

Contributing the $4,000 to a Roth IRA

Answer

Contributing the $4,000 into a Traditional IRA

Answer

Contributing the $4,000 a year into a diversified set of mutual funds in a non-qualified account

Answer

Contributing the $4,000 into his 401(k)

Question 5

Rosie is an architect who works as a 1099 employee on a contract basis for numerous companies in New York City. She is a single woman who makes a net income of $130,000 and is worried about saving money for retirement. Which approach will enable her to save the most cash before taxes?

Accepted Answer

Establish a SEP IRA and max it out.

Answer

Max out an Individual IRA.

Answer

Fully max out the 401(k) with the firm she is contracting for currently.

Answer

Fully max out her Roth IRA.

Question 6

Due to the patent portfolio, she built and the fortune she inherited from her family, Natasha is incredibly affluent on her own. She was a wise saver while she was working, and her 401(k), which she turned over into an IRA, now has a $2,000,000 value. What are the tax implications for Natasha's retirement if she is 74 years old?

Accepted Answer

If she does not take her RMD, she will owe a 50% penalty on the amount of RMD that should have been taken.

Answer

Since Natasha is younger than 75, she is not required to take an RMD, allowing her IRA to grow tax-free.

Answer

If she does not take her RMD, she will owe a 50% penalty on the entire balance of the IRA.

Answer

She is under 75 years old, thus if she fails to take her RMD, she will be fined the amount she ought to have taken at the applicable marginal income tax rate.

Question 7

Which of the following strategies would bring in money for a publicly traded charity for a predetermined amount of time while allowing the underlying stocks' growth to eventually go back to the donor's family?

Accepted Answer

A CLAT

Answer

A CRUT

Answer

A CRAT

Answer

A NIMCRUT