Free CRPC Retirement Income and Management Questions and Answers

Question 1

What is a characteristic of a TIPS (Treasury Inflation-Protected Security)?

Accepted Answer

Returns are tied to the consumer price index.

Answer

The principal decreases each year.

Answer

TIPS are sold at a discount.

Answer

The increase in principal is not taxable until maturity.

Question 2

What does Jensen's alpha tell you?

Accepted Answer

The percentage a manager over or underperformed based on the amount of risk taken.

Answer

The volatility of a portfolio compared to the market.

Answer

The average return of a portfolio over a specified period.

Answer

The diversification level of a portfolio.

Question 3

What is a correct statement about the effect that income and asset ownership have on Social Security benefit payments?

Accepted Answer

Unearned income, such as income from investment assets, has no effect on the amount of Social Security benefits paid to a worker.

Answer

Unearned income, such as income from investment assets, reduces the amount of Social Security benefits paid to a worker.

Answer

The value of assets owned by the worker affects eligibility for Social Security benefits.

Answer

Social Security benefits are not affected by income or asset ownership.

Question 4

What should have no impact on your decision of when to receive Social Security benefits?

Accepted Answer

The earnings of your dependents.

Answer

The size of your retirement savings.

Answer

Your health status.

Answer

The availability of other sources of income.

Question 5

What SHOULD have an impact on your decision of when to receive Social Security benefits?

Accepted Answer

The income benefit provided, additional sources of income, and condition of health.

Answer

The earnings of your dependents.

Answer

The size of your retirement savings.

Answer

The availability of other government assistance programs.

Question 6

When deciding how much to contribute to a Roth IRA, what is something you must always remember to consider about your client?

Accepted Answer

Their adjusted gross income (AGI).

Answer

Their age and retirement goals.

Answer

Their investment portfolio and risk tolerance.

Answer

Their employment status and employer-sponsored retirement plans.

Question 7

What is a deductible IRA?

Accepted Answer

An IRA that allows you to deduct your contributions on your tax return.

Answer

An IRA that allows you to make contributions with after-tax dollars.

Answer

An IRA that provides tax-free withdrawals in retirement.

Answer

An IRA that has contribution limits based on your income.

Question 8

Net short-term capital gains are treated as what type of income?

Accepted Answer

Ordinary

Answer

Tax-deferred

Answer

Tax-exempt

Answer

Qualified

Question 9

Regarding longevity annuities, why are payments larger than those received from a regular annuity?

Accepted Answer

Because of the delay in receipt of the actual payments.

Answer

Because they offer higher interest rates.

Answer

Because they are funded with after-tax dollars.

Answer

Because they provide guaranteed income for life.

Question 10

What type of insurance is referred to as "pure" life insurance?

Accepted Answer

Term life insurance

Answer

Whole life insurance

Answer

Variable life insurance

Answer

Universal life insurance