Practice Test Geeks(CRC) Certified Retirement Counselor Practice Test
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CRC Investment Strategies & Asset Allocation Flashcards

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

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  1. What does 'Monte Carlo simulation' help a CRC counselor determine in retirement planning?

    Answer: Probability that a retirement portfolio will last throughout retirement

    Monte Carlo simulation runs thousands of random return scenarios to estimate the probability that a client's portfolio will survive their expected retirement horizon.

  2. A client wants to minimize risk without sacrificing all growth potential. Which portfolio allocation is typically considered 'balanced' or 'moderate'?

    Answer: 60% equities / 40% bonds

    A 60/40 equity-to-bond split is the classic 'balanced' portfolio, providing growth potential while moderating volatility through fixed-income exposure.

  3. Which type of bond is specifically designed to protect investors against inflation and is commonly recommended for retirement portfolios?

    Answer: Treasury Inflation-Protected Securities (TIPS)

    TIPS are U.S. government bonds whose principal adjusts with the Consumer Price Index, directly protecting purchasing power against inflation.

  4. What is the 'efficient frontier' concept as it applies to retirement portfolio construction?

    Answer: The optimal set of portfolios offering the highest expected return for a given level of risk

    The efficient frontier, from Modern Portfolio Theory, represents portfolios that achieve the maximum expected return for each level of risk, guiding optimal asset allocation decisions.

  5. Which investment vehicle provides tax-free growth and withdrawals in retirement, making it valuable for long-term retirement asset allocation?

    Answer: Roth IRA

    A Roth IRA allows after-tax contributions to grow tax-free, and qualified withdrawals in retirement are completely tax-free, providing significant tax diversification.

  6. What is 'dollar-cost averaging' and how does it benefit retirement investors?

    Answer: Investing a fixed dollar amount at regular intervals regardless of market price

    Dollar-cost averaging involves investing a fixed amount regularly, automatically buying more shares when prices are low and fewer when prices are high, reducing the impact of market volatility.