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CSI Applied Financial Planning Certification Exam 1 (AFP) Sample Questions:
1. Alexander and Irena, age 30 and 32 respectively, are married and have been working full-time for one year.
They have a daughter, age 3, and are expecting their second child. They recently bought a home with a mortgage balance of $390,000 at 4% amortized over 25 years. Their financial planner is trying to determine their tolerance for risk. After completing the life-cycle analysis, how can their financial planner explain the stage in which the couple finds themselves and the risk tolerance associated with it?
A) They are at the consolidation stage where they can tolerate moderate to high level of risk.
B) They are at the gifting stage where their tolerance of risk is low.
C) They are at the financial independence stage where their tolerance of risk is low.
D) They are at the accumulation stage where they can tolerate a high level of risk.
2. A client refuses to provide details about debt balances, tax returns, and monthly expenses but asks the planner to confirm whether retirement at age 55 is achievable. What should the planner do?
A) Explain that the conclusion will be limited or unreliable without the missing information.
B) Estimate the figures secretly from the client's age and income.
C) Use generic assumptions and present the plan as reliable.
D) Proceed only with investment recommendations.
3. What key question should be answered during the recommending strategies stage of the financial planning process?
A) What are the client's needs and goals?
B) Are the client's goals feasible?
C) How can the client achieve her goals?
D) How and by whom will the planner be compensated?
4. A higher-income spouse contributes to a spousal RRSP for the lower-income spouse. The lower-income spouse withdraws the contribution amount the following year. What should the planner warn them about?
A) The contribution permanently eliminates all future spousal RRSP room.
B) The withdrawal may attribute back to the contributing spouse.
C) The withdrawal must be taxed as capital gains.
D) The withdrawal is always tax-free.
5. Lex's client, Phillip, has signed an agreement to purchase his uncle's business when his uncle retires in five years for $210,000. Phillip has $175,000 today, how should Lex recommend Philip invest his money?
A) Phillip should purchase a 5-year bond with a rate of 3.75%.
B) Phillip should purchase a 5-year 3.50% annual GIC.
C) Phillip should deposit the funds into a savings account which is currently paying 3.00% per year.
D) Phillip should purchase an equity mutual fund which has had an average return of 6.00% a year for the past five years.
Solutions:
Question # 1 Answer: D | Question # 2 Answer: A | Question # 3 Answer: C | Question # 4 Answer: B | Question # 5 Answer: A |