CFP® Practice Question

Alan paid $70,000 for a MEC policy when he was 50 years old. What are the income tax ramifications if he takes a $15,000 loan 3 years after purchasing the policy? The policy was worth $78,000 at the time of the loan. Alan would not have to report any taxable income or penalty. Alan would…

Dale refinanced his home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if he owed $350,000 at the time of the refinance and the interest rate is 3%? $680 $771 $1,136 $1,242 CLICK TO REVEAL ANSWER Expand A is the answer. Brandon pays his mortgage every two weeks which…

Lucky Star Corp has been extremely lucky with their defined benefit plan as it is currently overfunded. Management decided to terminate the plan while they are overfunded and share the excess with the employees. What amount of reversion tax will Lucky Star Corp have to pay upon termination? 0% 10% 20% 50% CLICK TO REVEAL…

An investor bought a bond at par that matures in 10 years. The bond pays an annual coupon of $110 and the reinvestment rate is 7%. What is the realized compound yield of this bond? 7.23% 8.01% 9.67% 14.10% CLICK TO REVEAL ANSWER Expand C is the answer. One would anticipate a realized compound yield…

Shannon refinanced her home mortgage to a 30-year fixed mortgage with biweekly payments. How much is each payment if she owed $350,000 at the time of the refinance and the interest rate is 4.5%? $818 $881 $1,012 $1,229 CLICK TO REVEAL ANSWER Expand A is the answer. Shannon pays her mortgage every two weeks which…

Last year, David paid down his motorcycle loan by $4,000 and his school loan by $8,000. He was also able to add $11,000 to his IRA from his checking account. David’s investment account grew by $15,000 during the year. How much did David’s net worth increase for the year? $12,000 $23,000 $27,000 $38,000 CLICK TO…

A Sec. 303 Redemption is most likely appropriate for which of the following estates? At Fred’s death, Fred owned all of his assets, including the stock of a closely-held corporation in joint tenancy WROS with his wife. Before Gloria’s death, she transferred all of her assets, including the stock, in a closely-held corporation to an…

Savanna’s PIA amount is $800. If her full retirement age is 67 and she decides to start taking Social Security benefits at age 64, what is the amount of her monthly benefit? $400 $560 $640 $800 CLICK TO REVEAL ANSWER Expand C is the answer. Savanna will have a 20% reduction in benefits for taking…

George Sloan sold farmland valued at $200,000 to his son Frank.  Frank paid $40,000 at closing and signed an installment obligation for the remainder of the purchase price to be paid over ten years at 10% interest on the outstanding balance. If Frank sells the property to a second purchaser for $210,000 cash 20 months…

Which of the following statements concerning a Will are correct? A will can be altered, amended, or completely rewritten at any time before a person’s death. A will cannot be rewritten but can be amended at any time by a codicil. A will must be signed by the maker and usually must be witnessed by…