CRPC EXAM 1 2023-2024 ACTUAL EXAM 80 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A+
When the client's circumstances change, the asset management process
goes back to the data gathering step in the process. -ANSWER-A) realistic
B) clearly defined
C) long-term perspective
D) fluid
--D
An investment policy provides guidelines that are standards to be followed.
If they are fluid, they are ever-changing and therefore would be difficult to
implement and would provide inconsistency in the management of the
portfolio.
An investment policy provides guidelines that are standards to be followed.
If they are fluid, they are ever-changing and therefore would be difficult to
implement and would provide inconsistency in the management of the
portfolio. -ANSWER-A) tactical.
B) alpha.
C) core/satellite.
D) strategic.
--B
Alpha is not an asset allocation strategy, but a way to measure a portfolio
manager's return relative to the amount of risk that has been taken.
, CRPC EXAM 1 2023-2024 ACTUAL EXAM 80 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A+
Assume the following asset classes have the correlations to long-term
government bonds shown below:
Treasury bills:.12 Gold:-.25 Large stocks:.22 Small stocks:.17
Which one of the following correctly states the impact of diversification on
long-term government bonds? -ANSWER-A) Gold provides more
diversification than large stocks.
B) Small stocks provide more diversification than Treasury bills.
C) Treasury bills provide more diversification than gold.
D) Large stocks provide more diversification than small stocks.
--A
The asset with the lowest correlation provides the most diversification.
Therefore, gold provides more diversification than any of the other assets.
What is the price of a bond with a 7% coupon, a $1,000 par value, and a
maturity of 20 years if the market interest rate for similar bonds is 6%? -
ANSWER-A) $1,074.39
B) $893.23
C) $1,000.00
D) $1,115.57
--D
Set the calculator for 2 P/YR and use the END mode. The inputs then are
as follows: 1,000 [FV], 35 [PMT], 20 [SHIFT] [N] = 40, 6 [I/YR], and solve
for PV = $1,115.57. Note: The $35 payment is the semiannual payment of
the bond. This is computed by taking the 7% coupon rate the par value of
$1,000 = $70 and divide that by 2 to get the semiannual interest paid, in
, CRPC EXAM 1 2023-2024 ACTUAL EXAM 80 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A+
this case $35. Also, the yield to maturity (YTM) is less than the coupon
rate, thus the bond must be selling at a premium.
This year, your 63-year-old client had $17,025 of earned income and
$30,000 of investment income. He was also drawing Social Security
benefits. Which one of the following correctly describes the impact on his
Social Security benefits? -ANSWER--- There is no reduction to his benefits.
The client's earnings (earned income) are below the allowable limit for the
current year ($18,240 for 2020). Remember that according to the work
penalty rule, only earned income is counted toward the "allowable limit."
Which one of the following is a correct statement about the amount of
Social Security retirement benefits available when a fully insured worker's
retirement benefit begins at full retirement age (FRA)? -ANSWER-A) If the
spouse of the worker has attained FRA and is entitled to benefits on their
earning record, the benefit is the lesser of 100% of the spouse's own PIA or
50% of the worker's PIA.
B) If the spouse is at or above his or her full retirement age when
commencing Social Security benefits, the spouse will receive at least 50%
of the worker's PIA.
C) A 63-year-old spouse of the retired worker will receive at least 50% of
the worker's PIA.
D) The worker will receive 80% of his or her primary insurance amount
(PIA).
--B
, CRPC EXAM 1 2023-2024 ACTUAL EXAM 80 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A+
The spouse who starts receiving benefits at his or her Social Security full
retirement age will receive 50% of the worker's PIA unless the spouse's
Social Security benefit is higher based on his or her own earnings. (Note:
The FRA began increasing for those workers who reached age 62 in the
year 2000.) At full retirement age the worker will receive 100% of PIA. The
50% of PIA is reduced for each month the spouse is under full retirement
age when benefits begin. A spouse who is at FRA and entitled to benefits
on their own working record would receive the higher of 100% of their own
PIA or 50% of the spouse's PIA.
Which one of the following is correct regarding most types of tax exempt
interest and the taxation of Social Security benefits? -ANSWER-A) 85% of
the tax-exempt interest is included in the computation of the taxation of
Social Security benefits.
B) All of the tax-exempt interest is included in the computation of the
taxation of Social Security benefits.
C) None of the tax-exempt interest is included in the computation of the
taxation of Social Security benefits.
D) 50% of the tax-exempt interest is included in the computation of the
taxation of Social Security benefits.
--B
All tax-exempt interest income is included in computing the portion of
Social Security benefits that are subject to taxation. However, tax-free Roth
distributions are not counted when determining provisional income. A
maximum of 85% of the Social Security benefits are subject to taxation.
Provisional income -ANSWER-Provisional income is defined by the Internal
Revenue Service (IRS) as the sum of wages, taxable and nontaxable
interest, dividends, pensions, self- employment and other taxable income
plus half (50 percent) of your annual Social Security benefits.
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