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CSI Applied Financial Planning Certification Exam 1 (AFP) Sample Questions:
1. Owen and Lina are looking to purchase a home in the next few months. Owen is the primary income earner for the family. His credit history is weak with several recently paid collections Lina has a perfect credit record but limited income and irregular employment. What will their financial planner advise them about the impact their credit ratings will have on their ability to secure a mortgage?
A) Lina's strong credit rating will make up for Owen's credit history
B) Lina's low income will prevent them from qualifying
C) Since Owen's collections are paid, they would be able to qualify
D) The primary income earner must have a minimum credit score to qualify
2. What key question should be answered during the recommending strategies stage of the financial planning process?
A) Are the client's goals feasible?
B) What are the client's needs and goals?
C) How can the client achieve her goals?
D) How and by whom will the planner be compensated?
3. A financial planner, Rachel, is preparing to recommend a discretionary portfolio manager to her client. The portfolio manager is owned by Rachel's former employer, and Rachel receives no referral fee. However, the former employer regularly sends new clients to Rachel's practice. What should Rachel do before making the recommendation?
A) Recommend the manager only if the client signs a risk acknowledgement form.
B) Disclose the relationship and the potential conflict before the client decides.
C) Proceed because no monetary referral fee is paid.
D) Avoid discussing the portfolio manager and let the client find one independently.
4. Richard pays periodic spousal support and child support under a written separation agreement. Which statement is generally correct?
A) Child support is taxable to the recipient if paid monthly.
B) Spousal support is never relevant for tax planning.
C) Qualifying periodic spousal support may be deductible to Richard and taxable to the recipient, while child support is generally neither deductible nor taxable.
D) Both spousal and child support are always deductible to Richard.
5. Richard reviewed his divorce settlement from his partner Alex with his advisor Maria. He is deciding between providing a lump sum spousal support payment of $60,000 or making monthly payments. If Richard's income is $200,000 and Alex's income is $40,000, what should Maria advise Richard about the tax implications for both Richard and Alex in regard to the lump sum payment?
A) Richard will deduct half of the lump-sum support payment and pay taxes on the remaining $170,000 of income and Alex will claim the other half of the lump-sum support payment in addition to his earned Income of $40,000.
B) Richard will pay taxes on the entirety of the $200,000 and Alex will pay taxes only on his earned income of $40,000.
C) Richard will deduct the payment and pay taxes on the remaining $140,000 of income and Alex will pay taxes only on his earned income of $40,000.
D) Richard will deduct the payment and pay taxes on the remaining $140,000 of income, and Alex will pay taxes on the lump-sum payment of $60,000.
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: C | Question # 3 Answer: B | Question # 4 Answer: C | Question # 5 Answer: B |
By Otis
