FREE Certified Financial Planner MCQ Questions and Answers

Question 1

Paula recently learned that she had successfully passed the CFP exam. She could choose from the following:

Accepted Answer

Once she has satisfied the educational and experience requirements, she must finish the certification process by signing the Ethics Declaration and Agreement.

Answer

Start charging fees for financial planning services

Answer

Take out a newspaper ad identifying Paula Templin as a tax and investment planning expert with the title "CFP."

Answer

Waive out of the annual CE requirements for both insurance and investment licenses.

Question 2

Helen wants to get involved in her hometown's startup scene. She is divorced, has a net worth of $250,003, an annual salary of $101,000, and is not an accredited investor. Which of the following could Helen perform in accordance with the JOBS Act?

Accepted Answer

Contribute up to $10,100 through a crowdfunding portal.

Answer

Marry Royal, an accredited investor worth $25mm, and then raise her fund via Crowdfunding.

Answer

As she is not an accredited investor, Heather may not participate in startups other than through her friends and family.

Answer

Contribute up to $25,000.30 through a crowdfunding portal

Question 3

Which of the following actions by Matthew would be considered a violation of the Integrity element of the CFP Standards of Conduct?

Accepted Answer

Owned a firm that opened bank accounts for foreign individuals subject to international sanctions so that they can skirt the restrictions.

Answer

Accidentally not enter a trade for a client due to circumstances outside his control.

Answer

Refused to follow a client's orders to help them cover up their affair.

Answer

Not accept a client because multiple red flags which arose under the Know Your Client requirements had made him uneasy.

Question 4

In order to save money for her dream of starting her own business when she is 42 years old, Ellie has a number of possibilities. By then, she needs $45,000. Which choice is ideal for her?

Accepted Answer

Put $1,250 a month into an online bank account with a 2% annual rate of return.

Answer

Put $750 a month into a Roth IRA with a 9% return.

Answer

Put $750 a month into a stock fund with a 15% annual rate of return

Answer

Put $1,000 a month into a 529 Plan with a return of 7%.

Question 5

Rebecca the planner is creating a list of paperwork that her client needs to do or bring to the meeting. Assume that the financial planning agreement has been signed and specifies that it will cover retirement planning, investment allocations, and preparing for insurance in the event of death or incapacity. Which of the following Rebecca should not ask the client?

Accepted Answer

Can you give me a copy of your genealogy for three generations to determine longevity?

Answer

Can you give me a household budget including both inflows and outflows?

Answer

Can you give me a copy of your benefits books from work?

Answer

Can you give me copies of all your investment accounts?

Question 6

As his planner, Fang wants to talk with you about growing his company. He currently employs around 20 people, all in one location, and they work with cutting-edge machinery and a lot of commodities in the manufacturing process. He worries about how he will pay for and staff this growth. What information, given the economic cycle, would support this decision?

Accepted Answer

The overall monetary supply is increasing

Answer

The overall monetary supply is decreasing

Answer

The CPI has been climbing wildly

Answer

New housing starts are falling

Question 7

You work as a planner with a freshly licensed physician who has completed his residency and is going to accept a position earning him $240,000 as a single person after taxes and retirement contributions. He owns $220,000 in student loans with 20 year durations ($100,000 each at 4% and $120,000 at 6%, a combination of Federal and Perkins loans). He also has a $50,000 auto loan at 4.5% interest for six years, a $5,000 credit card debt at 9.5%, and he thinks he can put 5% down on a $500,000 house within a year thanks to a special program for new doctors. He has accumulated $12,000 in liquid savings during his tenure. Based on this scenario, what would be a reasonable recommendation for this new doctor that would enable him to balance the purchase of a new home and debt repayment?

Accepted Answer

He should take the monthly payment and put it in a money market fund because Federal Student Loans have a six-month grace period after graduation (nine months for Perkins Loans). He should also consider refinancing the credit card debt to lower or remove the interest rate given the significant increase in income.

Answer

To optimize possible returns for the year, pay the minimum on the credit card and purchase cryptocurrency before making the purchase of the home.

Answer

He should downsize the house he wants to in the $250,000 area, sell his automobile, and get a used one for $5,000.

Answer

Put $50,000 into a Single Premium Life Insurance policy and borrow the money out for the down payment as he can contribute more to a Roth IRA than the maximum amount allowed.