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CSI AFP-Exam-1 Exam Overview:

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CSI Applied Financial Planning Certification Exam 1 (AFP) Sample Questions:

1. A business owner completes an estate freeze, taking back preferred shares with a fixed redemption value while children receive common shares. What is a primary risk of this strategy for the owner?

A) The freeze automatically eliminates all tax at death.
B) No future growth can occur in the corporation.
C) The children can never benefit from future growth.
D) The owner's retained preferred shares may not provide adequate income or inflation protection.

2. James is visiting Gurjeet, his financial planner, to discuss his financial affairs after the recent passing of his long-time partner Peter. James is concerned that the cost of probate will be a heavy burden. Which holdings should Gurjeet advise James are included in calculating the cost of probate?

A) Insurance contracts with a preferred beneficiary designated.
B) Registered plans with an adult child designated as the beneficiary.
C) Assets held in a formal, irrevocable trust account.
D) Assets held joint tenants in common.

3. Sheeba is a financial planner and meeting with Ivana, a new client. She explains that part of her process is to recommend products and services, but prior to doing so, she will closely investigate the options to ensure they match up with Ivana's goals. Which professional responsibility has Sheeba demonstrated to Ivana?

A) Professionalism.
B) Diligence.
C) Objectivity.
D) Integrity.

4. Jelena, age 32, is single and works as a partner in a law firm. She is meeting with her financial planner, May, as she would like to start investing. Her friend John talks about hot sectors in the stock markets and has recently brought up the cannabis sector. She has done some reading about this sector and is willing to experience large decline in her investments. Jelena also mentioned to May that she believes in high long-term returns. What conclusion can May draw based on their discussions about the stock market and Jelena's expectations?

A) Jelena has limited Investment knowledge and experience.
B) Jelena has good investment knowledge and experience.
C) Jelena has limited investment knowledge but good experience.
D) Jelena has good investment knowledge but low experience.

5. A couple has stable employment, two dependants, and essential monthly expenses of $5,200. They have no emergency reserve. Which recommendation is most appropriate before increasing long-term investment contributions?

A) Use a credit card as the emergency plan.
B) Withdraw from RRSPs when emergencies occur.
C) Invest all surplus cash in a high-growth equity fund.
D) Build a liquid emergency reserve of roughly three to six months of essential expenses.

Solutions: