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Certified Financial Planner MCQ Flashcards

7 cards from real CFP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Certified Financial Planner MCQ flashcards as text

  1. A client aged 55 wants to withdraw from their 401(k) early. Which exception allows penalty-free withdrawals before age 59½?

    Answer: Substantially Equal Periodic Payments (SEPP) under Rule 72(t)

    Rule 72(t) SEPP allows penalty-free early withdrawals from retirement accounts as long as payments continue for at least 5 years or until age 59½, whichever is longer.

  2. Under the CFP Code of Ethics, which duty requires a CFP® professional to place the client's interests above their own?

    Answer: Loyalty

    The duty of Loyalty requires CFP® professionals to place the interests of the client above those of the CFP® professional and the firm.

  3. A married couple filing jointly in 2024 has a combined AGI of $250,000. What is their Medicare surtax exposure on net investment income?

    Answer: Both 3.8% NII surtax and 0.9% Additional Medicare Tax apply

    At $250,000 AGI for MFJ, the couple hits the threshold for both the 3.8% Net Investment Income Tax on investment income and the 0.9% Additional Medicare Tax on earned income.

  4. Which Social Security claiming strategy is generally most beneficial for a healthy single individual who expects to live past age 80?

    Answer: Delay claiming until age 70 to maximize the monthly benefit

    Delaying Social Security until age 70 increases the monthly benefit by 8% per year beyond FRA, making it optimal for individuals with above-average life expectancy.

  5. A client holds a bond with a 6% coupon, 10 years to maturity, and a current price of $1,080. If market rates rise to 7%, what happens to the bond's price?

    Answer: The price falls below $1,080 because the bond is now less competitive

    Bond prices move inversely with interest rates; when market rates rise above the coupon rate, the bond's price falls to make its yield competitive with new issues.

  6. Which type of life insurance provides permanent coverage, builds cash value, and allows the policyholder to adjust premiums and death benefits?

    Answer: Universal life insurance

    Universal life insurance is a flexible permanent policy that allows adjustments to premium payments and death benefit amounts, while accumulating cash value at a current interest rate.

  7. A client's portfolio has a beta of 1.3. If the market returns 10% and the risk-free rate is 2%, what is the expected portfolio return using CAPM?

    Answer: 12.4%

    CAPM: Expected Return = 2% + 1.3 × (10% − 2%) = 2% + 10.4% = 12.4%.