CFP® Practice Question

Tom gave his son, David, a birthday present of Big M stock with a fair market value of $50,000. Tom paid gift tax of $9,700 as Tom had previously given David earlier this year a cash gift. Tom’s adjusted basis in the stock on the date of the gift was $30,000. Three months later, David…

Which of the following statements concerning a Will are correct? (1) A will can be altered, amended, or completely rewritten at any time before a person’s death. (2)  A will cannot be rewritten but can be amended at any time by a codicil. (3)  A will must be signed by the maker and usually must…

Tom wants $70,000 a year in today’s dollars in retirement. He anticipates retiring in 15 years and living in retirement for 30 years. Tom can earn 6% on his investments and he expects inflation to average 4%. Approximately how much should Tom have saved by the day he retires to meet this goal? $1,021,221 $1,573,041…

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…

Tom carries an H0-3 policy with $300,000 of coverage and a $3,500 deductible. It would cost $500,000 to rebuild Tom’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Tom’s kitchen? $68,000 $71,500 $96,500 $100,000 CLICK TO REVEAL ANSWER Expand B is the answer. Tom…

Which of the following combinations correctly describes a spread? A combination of a short sale and a purchase of a call for the same stock A combination of buying and selling calls on the same stock with different expiration dates and exercise prices A combination of a put and a call on the same stock…

Gary Chapelle owns a duplex with his brother in joint tenancy with right of survivorship. Gary would like to pass his interest in the property to his son, Bill, and Gary has provided in his will that his interest in the duplex will pass to Bill. Which of the following statements concerning the transfer of…

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…

An investor bought a bond at par that matures in 20 years. The bond pays an annual coupon of $190 and the reinvestment rate is 4%. What is the realized compound yield of this bond? 6.21% 8.18% 10.21% 11.10% CLICK TO REVEAL ANSWER Expand B is the answer. One would anticipate a realized compound yield…

Which of the following combinations correctly describes a spread? A combination of a short sale and a purchase of a call for the same stock A combination of buying and selling calls on the same stock with different expiration dates and exercise prices A combination of a put and a call on the same stock…