Applied Financial Planning Certification Exam 1 (AFP)

Question 1

Which asset is most likely to flow through a deceased person's estate rather than pass automatically outside the estate?

A. Asset held as joint tenants with right of survivorship.

B. Life insurance with a named beneficiary.

C. Asset owned as tenants in common.

D. RRSP with a named spouse as beneficiary.

Correct Answer: C

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

Question 2

Dianna is visiting with Karen, her Financial Planner, and is excited to report that she has just bought her dream home. She has also let Karen know she Is meeting with an insurance representative to purchase a whole life insurance to cover her 20-year mortgage. Why might Karen suggest Dianna consider term life insurance instead?

A. The cost of premiums is lower than whole life.

B. It is better suited for long term insurance needs.

C. The client's health may deteriorate as she gets older.

D. The term policy has a cash value, which can be borrowed against.

Correct Answer: A

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

Question 3

Gina plans to take a one-year leave of absence from her employer without pay. Gina has a TFSA invested in equity mutual funds which is currently below book value, an RRSP invested in cash, a Nova Scotia LIRA invested in GICs, and a line of credit. Assuming all have sufficient funds, which plan should Gina access to ensure she meets her goal of budget effectiveness during this time?

A. The LIRA.

B. The RRSP.

C. The TFSA.

D. The line of credit.

Correct Answer: B

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

Question 4

What key question should be answered during the recommending strategies stage of the financial planning process?

A. How and by whom will the planner be compensated?

B. How can the client achieve her goals?

C. Are the client's goals feasible?

D. What are the client's needs and goals?

Correct Answer: B

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

Question 5

A client realizes a $16,000 capital loss on one non-registered investment and a $28,000 capital gain on another non-registered investment in the same year. How should the loss be treated?

A. It is applied against capital gains to reduce the net capital gain.

B. It becomes a refundable tax credit.

C. It is ignored because losses have no tax value.

D. It is deducted directly against employment income.

Correct Answer: A

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

Question 6

Edward is risk averse and has limited investment knowledge. He will only purchase 100% guaranteed products insured by the CDIC. Edward is meeting with his financial planner, Marissa, for the third time this year about rates, and starts the meeting by criticizing her employer for paying such low returns on GICs.
Edward says he is considering taking his business elsewhere. How should Marissa respond to Edward's comments?

A. Explain that if he can increase his risk tolerance, she can get a better rate of return for him.

B. Show understanding of his frustration, assure him that these are the best rates she can offer and suggest a follow up meeting once Edward has had a chance to shop around.

C. Let him know that her GIC rate is the highest in the market.

D. Offer to match any competitor rate Edward can provide in writing.

Correct Answer: B

Explanation: Only visible for Actualtests4sure members. You can sign-up / login (it's free).

CSI Applied Financial Planning Certification Exam 1 (AFP) - AFP-Exam-1 Exam Practice Test

Latest Update

Useful Links

Contact Us