CFP® Practice Question

Olivia is a 25-year-old single mother with twin girls who just turned three. Olivia has worked for the last 5 years as an administrative assistant for a local law firm. Olivia’s firm provides her with a basic medical insurance policy and a split definition disability. Which of the following is the biggest risk exposure for…

Which of the following statements concerning insurance contracts is not correct? An insurance contract is bilateral because both the insurer and the insured make legally enforceable promises. In an insurance contract, the insurer has made legally enforceable promises for which it can be sued for breach of contract. Because property insurance contracts are personal, it…

Which of the following is a monetary policy that will tighten the money supply? Sell government securities Lower the discount rate Decrease government spending Increase taxes CLICK TO REVEAL ANSWER Expand A is the answer. Selling government securities is a monetary policy that will tighten the money supply as the cash used to purchase the…

Chuck lost his job last year when his company moved their factory overseas. Chuck has been unable to find another job and had to file for a Chapter 7 bankruptcy. Which of the following debts can be discharged in the bankruptcy? $10,000 of rent he owes his landlord $20,000 of taxes he owes the IRS…

Which of the following individuals would be most likely to need to register with the SEC under the Investment Advisers Act of 1940? Adam who retired last year from a big brokerage house, but he recently started providing services to 12 clients who live in his neighborhood that he met while out golfing. Belinda who…

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…

Sam McBuck has an estate of $10 million and would like to leave it to his nephews. Sam assumes he will live for at least 5 more years. The property in Sam’s estate currently includes the following assets: An apartment building in downtown New York that Sam owns with three partners, each of whom wants…

Kathleen transferred her closely held stock to a trust for the benefit of her two daughters. Kathleen will receive a $50,000 distribution each year for the next 10 years from the trust. At the end of the trust term, Kathleen’s daughters will each receive 50% of the remaining trust assets. What type of trust did…

Which of the following trusts should Jason establish in his Will to provide for his son Gaven’s living expenses until Gaven reaches age 65 if Gaven is currently a 30-year old unemployed aspiring actor? 2503(b) Trust 2503(c) Trust Crummey Trust Totten Trust CLICK TO REVEAL ANSWER Expand A is the answer. The 2503(b) Trust would…

A Section 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…