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

Explanation:
A key characteristic of TIPS is that their returns are tied to the consumer price index (CPI), which measures inflation. This means that the principal value of TIPS adjusts with inflation, providing protection against inflation. Additionally, any increase in principal is taxable each year, unless the TIPS are held in a tax-deferred account. TIPS are sold at par value and have maturities of up to 30 years.

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

Explanation:
Jensen's alpha measures the performance of an investment manager by comparing the actual returns with the expected returns, based on the risk taken. A positive alpha indicates that the manager has outperformed the market on a risk-adjusted basis, while a negative alpha indicates underperformance.

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

Explanation:
Unearned income, such as income from investment assets, does not affect the amount of Social Security benefits paid to a worker. Similarly, the value of assets owned by the worker does not affect eligibility for Social Security benefits. Social Security benefits are primarily based on the worker's earnings history and contributions to the Social Security system.

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

Explanation:
The earnings of your dependents, such as your spouse or children, should not impact your decision of when to receive Social Security benefits. Social Security benefits are primarily based on your own earnings history and contributions to the system. Your dependents' income does not directly affect the amount of benefits you receive. Therefore, it should not be a factor in determining when to claim your benefits.

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

Explanation:
The decision of when to receive Social Security benefits should be influenced by factors such as the income benefit provided by Social Security, additional sources of income available (such as pensions, retirement savings, or employment income), and the condition of health. These factors can affect the overall financial stability and well-being during retirement, making them important considerations when deciding when to start receiving Social Security benefits.

(CRPC) Chartered Retirement Planning Counselor Practice Test

(CRPC) Chartered Retirement Planning Counselor Practice Test

FREE CRPC Retirement Income and Management Questions and Answers