CFP® Practice Question

Big Blue Company stock has an average return of 7% and a standard deviation of 3%. What percentage of the time should an investor in Big Blue Company expect to earn 4% or more? A.34% 68% 84% 95% CLICK TO REVEAL ANSWERExpandC is the answer. Big Blue Company will earn between 4% and 11%, 68%…

Which of the following statements concerning systematic risk is correct? It can be greatly reduced by owning a diversified portfolio of common stocks. It covers those types of risks that cause all securities to move together in a systematic manner. Business risk, such as a strike at an individual firm, is considered systematic risk. It…

Which of the following statements concerning the call feature of a bond is not correct? If it is freely callable, the issuer may retire the bond at any time. If it is noncallable, the issuer may retire the bond prematurely by repurchasing it. If the bond carries a deferred call, the issuer may not retire…

An employee is currently in receipt of taxable income in which of the following circumstances? The employer makes an irrevocable, formally funded promise to pay the employee $300 per month for life, beginning at age 65, provided the employee does not terminate service prior to age 65. The employer makes an unsecured promise to pay…

Peter and his father Ryan each own 20% and 80% respectively in the RP Partnership. The partnership generates enough income for both partners to be able to afford the life insurance premiums or for the business to be able to pay the life insurance premiums. Which of the following is correct if Peter and Ryan…

Lauren paid $50,000 for a MEC policy when she was 50 years old. What are the income tax ramifications if she takes a $10,000 loan 5 years after purchasing the policy? The policy was worth $58,000 at the time of the loan. Lauren would not have to report any taxable income or penalty. Lauren would…

Which of the following individuals would typically qualify for accelerated death benefits under their term life insurance policy? Ida who is expected to die within 7 months from cancer. Jacob who is expected to die within 10 months from AIDS. Kay who is expected to die within 3 months from kidney failure. All of the…

Paula purchased an individual disability policy offered by her college alumni association to supplement the disability policy provided by her employer. Paula was out on disability for 6 months following a major heart attack. While on disability, Paula received $30,000 from her employer’s disability plan and $20,000 from her individual disability plan. How much of…

Which of the following individuals currently covered by Medicare Part A will not have any of their expenses covered by Medicare Part A? Evan, who spent one week in hospice care before losing his battle with cancer. Felicia, who was treated by her doctor for strep throat. Greg, who was needed a walker following hip…

Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWERExpandB is the answer. Frank should have…