CFP Certified Financial Planner 2

Question 1

A client aged 58 wants to withdraw from her 401(k) to pay medical bills. Which exception allows penalty-free early withdrawal?

Accepted Answer

Unreimbursed medical expenses exceeding 7.5% of AGI

Answer

Unreimbursed medical expenses exceeding 7.5% of AGI qualify for the 10% early withdrawal penalty exception under IRC Section 72(t).

Question 2

Under the CFP Board's Code of Ethics, which duty requires a CFP professional to act in the client's best interest at all times?

Accepted Answer

Fiduciary duty

Answer

The fiduciary duty requires CFP professionals to place the client's interests above their own in all financial planning relationships.

Question 3

Which Social Security strategy allows a married couple to maximize lifetime benefits when one spouse has significantly higher earnings?

Accepted Answer

Lower-earning spouse claims early while higher earner delays to age 70

Answer

Having the lower earner claim early provides income while the higher earner's delayed credits grow 8% per year, maximizing the survivor benefit.

Question 4

A client has a $500,000 portfolio with a standard deviation of 12% and an expected return of 8%. What does a coefficient of variation of 1.5 indicate?

Accepted Answer

1.5 units of risk per unit of expected return

Answer

The coefficient of variation (standard deviation ÷ mean return) measures risk per unit of return, so 1.5 means 1.5 units of risk for each unit of expected return.

Question 5

Which type of annuity provides the highest initial payout but leaves a surviving spouse with no continued income?

Accepted Answer

Life only (straight life) annuity

Answer

A life-only annuity pays the highest monthly benefit but stops at the annuitant's death, providing no income to a surviving spouse.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Certified Financial Planner 2