CFP Ultimate Certified Financial Planner 2

Question 1

A client in the 32% marginal tax bracket is choosing between a municipal bond yielding 4.2% and a corporate bond yielding 6.5%. Which bond provides the higher after-tax yield?

Accepted Answer

Municipal bond at 4.2%

Answer

The taxable equivalent yield of the muni is 4.2% / (1 - 0.32) = 6.18%, which is less than 6.5%, so the corporate bond is actually higher—wait, 6.18% < 6.5% means corporate wins, but the muni after-tax yield (4.2%) vs corporate after-tax (6.5% × 0.68 = 4.42%) makes the corporate bond higher at 4.42%.

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 when providing financial advice?

Accepted Answer

Fiduciary duty

Answer

The fiduciary duty requires CFP professionals to act in the client's best interest, placing the client's interests above their own.

Question 3

A couple files married filing jointly and has a combined AGI of $310,000. What is the maximum annual contribution they can make to a Roth IRA in 2024?

Accepted Answer

$0 — they are fully phased out

Answer

For 2024, the Roth IRA phase-out for MFJ filers begins at $230,000 and ends at $240,000, so a couple with $310,000 AGI is fully phased out and cannot contribute.

Question 4

Which of the following best describes the concept of 'sequence of returns risk' in retirement planning?

Accepted Answer

The risk that poor early returns during withdrawal phase will permanently impair portfolio longevity

Answer

Sequence of returns risk refers to the danger that a string of poor investment returns early in retirement, combined with withdrawals, can deplete a portfolio faster than average returns would suggest.

Question 5

A 55-year-old employee separates from service. Under the IRC Section 72(t) 'Rule of 55,' which account allows penalty-free withdrawals?

Accepted Answer

Current employer's 401(k)

Answer

The Rule of 55 allows penalty-free withdrawals from the current employer's qualified plan if the employee separates from service in or after the year they turn 55.

CFP - Certified Financial Planner Practice Test

CFP - Certified Financial Planner Practice Test

CFP Ultimate Certified Financial Planner 2