CSI Applied Financial Planning Certification Exam 1 (AFP) - AFP-Exam-1 Exam Questions

QUESTION NO: 1
Suzy, age 45, is meeting with a financial planner as she has recently inherited $1.25 million from her late aunt. Suzy has poor spending habits and would like to review options that would safeguard and help her receive stable cash flows. She does not have a lot of experience investing and would like to avoid making day- to-day investment decisions. Which type of investment account is most appropriate for Suzy?

QUESTION NO: 2
A client completed a financial plan two years ago. Since then, she has divorced, changed jobs, and purchased a new home. What is the planner's most appropriate recommendation?

QUESTION NO: 3
Richard pays periodic spousal support and child support under a written separation agreement. Which statement is generally correct?

QUESTION NO: 4
Sarah Jones is an incorporated owner of a successful manufacturing company. She currently has a large month to month cash flow surplus. This is expected to continue until she retires in seven years. Her personal mortgage is up for renewal. She needs to borrow $50,000 so that she can replace a piece of equipment that is needed in the manufacturing process. She would like a solution that results in paying the lowest interest cost over the life of the loan. Which loan product should the financial planner recommend to Sarah? Assume monthly compounding for all products and no pre-payment options.

QUESTION NO: 5
Bruna is a senior financial planner. At 4 p.m. on Friday afternoon (an hour before closing), her manager asks her to complete the following:
Fix a mutual fund trade that was entered incorrectly by a junior financial planner.
Call her client to advise him that his account is overdrawn, and the bank will refuse recent payments unless he credits the account before 5 p.m.
Bruna determines she can only complete one of the two tasks before the end of the business day. How should Bruna address her supervisor's request?

QUESTION NO: 6
Maya, a financial planner, is meeting with a new client who was recently referred to her. In determining the client's overall risk tolerance, what qualitative data should Maya capture as part of her process?

QUESTION NO: 7
How should Jenny, a financial planner, explain the benefits of a fee for service method of compensation to a prospective client?

QUESTION NO: 8
Which statement best distinguishes a defined benefit pension plan from a defined contribution pension plan?

QUESTION NO: 9
John and Jerry's financial planner have recommended they review their budget. What is the primary purpose of the budget?