CFP: Certified Financial Planner

CFP: Certified Financial Planner practice questions, page 2 of 12, with answer review and explanations.

Question 6

Alok, age 25 years, plans to retire at age 60 and his life expectancy is 75 years. His current expenditure is Rs. 2, 00,000 nnually. He estimates no reduction of expenses post retirement. How much will he save per annum to Achieve his target, if inflation rate is 6% and expected yield from investment is 10%? Assume he wishes to leave an Estate of 10% of his savings at the time of retirement.

  1. Rs. 73,878 A. It will be covered even if the income of all employees is above Rs. 6,500
  2. Rs. 9,612 B. 1 or more
  3. Rs. 66,490 C. 20 or more
  4. Rs. 8,651 Answer: A An establishment, with 100 employees, notified by the Central Government of India and which is also a factory engaged in a specified industry, would be covered under Employees Provident Fund and Miscellaneous Provision Act, 1952 if the number of employees, getting salary of Rs. 6,500 or less, is _____________. D. More than 20

Question 7

Prashant is an employee in the private sector to whom Payment of Gratuity Act does not apply. He retires after eight years of service. Among other retirement benefits, he also receives a gratuity of Rs. 2,50,000. His average salary for the past ten months, before resigning, was Rs. 42,000 per month. He desires to know how much of the gratuity amount, if any, is taxable?

  1. Rs. 82,000
  2. Nil
  3. Rs. 2,50,000
  4. Rs. 1,68,000

Question 8

Suryakant has an accident insurance policy which pays Temporary Partial Disability (TPD) benefit of Rs. 3,000 per week, for up to 104 weeks. He meets with an accident and is disabled and bedridden for 6 months. He has available leave of 4 weeks, after which he is on loss of pay. What benefit amount will he get from the insurance company?

  1. Rs. 60,000
  2. Rs. 72,000
  3. Rs. 66,000
  4. Rs. 78,000

Question 9

A client has the need to provide for the cost of his child's college education. He envisages that four annual payments of Rs. 20,000, in current money terms, would be needed beginning 15 years from now. Assuming level of inflation at 5% per annum and that the fund earns 8% per annum returns throughout, calculate the present value to be placed on this liability when carrying out a needs analysis for this client. (Round of your answer to the nearest '000')

  1. Rs. 50000
  2. Rs. 49000
  3. Rs. 24,000
  4. Rs. 23,000

Question 10

A client purchased a zero coupon bond 6.5 years ago for Rs. 525. If the bond matures today and the face value is Rs. 1,000, what is the average annual compound rate of return (calculated semi-annually) that the client realized on her investments?

  1. 10.40%
  2. 5.08%
  3. 11.34%
  4. 10.16%