FREE Certified Financial Planner MCQ Questions and Answers

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

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

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

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

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

Correct! Wrong!

Explanation:
A CFP professional is not allowed to: when providing professional services, either directly or indirectly: i. Use any method, plan, or scheme to defraud.

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?

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

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

Contribute up to $25,000.30 through a crowdfunding portal

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

Correct! Wrong!

Explanation:
Over $100,000 earners are permitted to use crowd financing websites to donate up to 10% of their revenue to startups.

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

Start charging fees for financial planning services

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

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

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

Correct! Wrong!

Explanation:
Paula must fulfill all four requirements for a CFP Practitioner certification, including the Ethics review in addition to the Educational and Experience requirements.

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?

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.

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

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

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.

Correct! Wrong!

Explanation:
This is a prudent cash flow choice with very little risk. A new professional must be crucial in assisting the client in managing cashflow.

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?

The overall monetary supply is decreasing

The CPI has been climbing wildly

The overall monetary supply is increasing

New housing starts are falling

Correct! Wrong!

Explanation:
A rising money supply is an excellent leading indicator, indicating that firms and consumers will be able to spend more money now and in the near future on products and services. As a result, this is encouraging for Fang.

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?

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

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

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

Can you give me copies of all your investment accounts?

Correct! Wrong!

Explanation:
It is improper to inquire about a client's ancestry. In addition, it is unnecessary because, while family history does affect longevity and, as a result, retirement calculations as well as potentially affect underwriting choices for life insurance and disability insurance, three generations are too many and the necessary information can be gleaned from a brief conversation with the client.

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?

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

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

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

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

Correct! Wrong!

Explanation:
With a monthly investment of $1,250 and an annual return of 2%, you can earn $46,337.63, of which only the increase is subject to taxes.

FREE Certified Financial Planner MCQ Questions and Answers

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

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?

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

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?

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