Latest Exam-5 Sample Questions and Answers for CFP
Posted by Prashant Shah on September 14, 2012
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nayan luhana said
Dear Prashant Sir
Thanks for the uploading new sample paper in your blog.
Ruhi said
dear sir,
the practical sums provided you is great. kindly provide us with sample questions on the case studies published by FPSB
Manish said
Dear ruhi sample questions of the recent case studies have not been published by the fpsb yet,however u can find other case studies along with questions for practise.best of luck.
rishi thaker said
i am following your website regularly.. The updates which you are prividing is really helpfull for all the cfp aspirants.. I have heard there will be negative marking in all the modules soon or latest till february.. Is it true
Prashant Shah said
Dear Rishi,
I have no news regarding the same, hence can’t comment on the same.
Regards,
Prashant V Shah.
anandgokhale said
Hello Prashant Sir I am Anand.Sir I gave exam 5 in 3 attempts but yet clear it.I got 46 marks in all attempts.Please guide me sir how can I solve my exam 5 ? I am in tension…..
Vinayak said
Dear Anand Gokhake,
I suggest you go through the Advance FP section of this blog carefully. Read thoroughly all the posts and go through the comments also. There are a lot of things you will learn and you will find a lot of your questions answered . This will help you in better tackling this exam. All the best.
Vinayak
jainsumit3 said
hello Prasantji ,
Seeing no updates from long time ? please contribute more on fp advance model.Your site has always been a pleasure to read .
Thank You
Koustubh S. Vaidya said
Dear All,
Need help on additional question
RETIREMENT-2: Your client aged 34 now requires at his retirement age of 60 years a corpus to sustain an annuity of Rs. 55,000 p.m. (current cost) inflation linked for a post-retirement life of 25 years up to which he expects to live. You estimate that his goal would be achieved by investing corpus at a return of 8%. Your client apprises you that he would additionally like to start a Trust with a donation of Rs. 1 crore (value then) on his reaching age 70 years and would bequeath posthumously a further amount of Rs. 1 crore (value then) for his son. He asks you whether this arrangement would be feasible by taking a little more risk while investing the retirement corpus. You estimate by taking 1% additional return than envisaged and opine that ______. (Consider inflation at 5.5%)
Further, questions can be framed as:
1. What return should be aimed at to achieve the goals? 9.10% p.a. (By employing Goal Seek function)
2. By how much the additional goals should be moderated in order to achieve them by taking risk of just 1% extra return? 90,14,975 Rs. (Goal Seek)
Manish said
Dear koustubh refer the comment number 40 to 45 from this link prashantvshah.wordpress.com/2012/04/04/advanced-financial-planning-case-studies-for-cfp/#comments
Koustubh said
Thanks Manish got it
Nikhil Shah said
Hi, can anyone share latest questions on final module.
Ravi v said
Dear Prashant Sir,
Firstly thanking you. This blog provides good and needful information for CFP aspirants.I am one of them. Today I cleared fourth module and now preparing for Final module.Please guide me how to prepare for that.
Thanks,
Ravi v.
DEV B DIXIT said
I was in touch with your blog on a regular basis. You blog provides information which are of immense value for the CFP Aspirants. I cleared Advanced Financial Planning Exam-5 on 21st July’2015 with B grade. I extend my sincere thanks to you.
Dev B Dixit
Prashant Shah said
Dear Dev,
Many congratulations for the success. Wish you a great career ahead.
Thank you so much for all the appreciations.
Keep helping all to become Cfp.
Regards
Prashant.
Manoj Kumar said
Dear Mr. Shah,
I cleared Exam 5 in Dec 14 and many thanks to you and your blog, now I am looking for a job related to the profile. My overall experience is in Sales in Banking n Hospitality. Now I want to join some financial planing and analysis kind of job. can you help me out where in this regard.
Regards
Manoj
esha verma said
sir plz can u tell me what type of qus will be asked in exam 5
Prabhakar said
Dear All,
Please help me out with goal seek function and stress test
or you can elaborate me these 2 question of sample paper 3 (sample paper 3 is given above on this page or click the link to get it
Click to access sp-3.pdf
ACCUMULATION/SWITCHES-2:For his son’s higher education after 15 years, a client estimates a lump sum required of Rs. 50 lakh and a further Rs. 30 lakh for his son’s business establishment 3 years later. You devise an investment strategy whereby equivalent funds are available in liquid scheme after 15 years. This involves starting a SIP in equity schemes immediately, increasing such investment by 20% after every three-year period and thus continuing for a total 12 years. At the end of 12 years, 30% of the outstanding equity fund corpus every year is redeemed and invested in liquid funds until entire equity fund is redeemed after 15 years. What Equity SIP amount is required immediately? If a stress test is applied for 2% reduction in equity returns and 1% reduction in liquid returns, by what percentage equity SIP amount should be stepped up in every three-year span? (Assume returns from equity funds and liquid funds in the first analysis to be 12% and 6%, respectively.
RETIREMENT-2: Your client aged 34 now requires at his retirement age of 60 years a corpus to sustain an annuity of Rs. 55,000 p.m. (current cost) inflation linked for a post-retirement life of 25 years up to which he expects to live. You estimate that his goal would be achieved by investing corpus at a return of 8%. Your client apprises you that he would additionally like to start a Trust with a donation of Rs. 1 crore (value then) on his reaching age 70 years and would bequeath posthumously a further amount of Rs. 1 crore (value then) for his son. He asks you whether this arrangement would be feasible by taking a little more risk while investing the retirement corpus. You estimate by taking 1% additional return than envisaged and opine that ______. (Consider inflation at 5.5%)
Thanks in advance. Eagerly waiting for response.
esha verma said
sir plz give me solution of this qus i have a paper on 22nd spet pls help
Kolli Phanendra said
Sir, i am preparing for exam-5.so will tell me what i want to prepare
Kolli Phanendra said
Sir,I compleated 4 modules.Now i am planning to write exam-5.So please tell me what i want to prepare.Please suggest anything to me to prepare for exam-5
Prashant Shah said
Hi
Congratulations for getting through 4 modules. Critical part to clear exam 5 is 2 marker and 5 marker questions as most of students have loss of marks there.
Also look at curriculum to understand the weights of subjects.
Best wishes.
Regards.
Salam said
Dear Prashant Sir,
Firstly thanking you. This blog provides good and needful information for CFP aspirants.I am one of them. Recently I cleared four module and now preparing for Final module.Please guide me how to prepare for that.
Preeti Chhatwal said
One of my friend given this question. She recently clear Exam AFP
Please help me with solution .. i am preparing for AFP.
1) Ashwin shared that his Housing loan interested was revised upward 100 basis point on 1/10/13 and further 150 basis upward revision on 01/04/15. Also informed that he enrolled in distance learning Global Project Management course last year and he took Education Loan from bank 5L 01/02/17 Interest rate 10%, Tenor 8 year and paying EMI from beginning from next month. He would like to know about current FY 17 -18 tax liability. (Mark 5)
2) Assume that Mr. Ashwin has got transferred to Nasik with an immediate effects and company offers him Rent free accommodation in lieu of HRA however Ashwin pays Rs. 3000/- concession rent to his company. The apartment is owned by company & also provides consumer durables cost Rs.1,00,000/-. Mr. Ashwin wants to know that taxable value of RFA & furniture perquisite. (As per 2001 population census, the city population was 08 Lakh, Depreciated value of furniture/consumer durables Rs. 87,220) (Mark 3)
3) Ashwin wants to know life insurance cover he needs in case of he is no more. He wants that his family should have the same life style. He wants corpus available to pay off all outstanding liabilities and also wants to protect childern’s higher education and marriage goals in case of an unfortunate death. Assume life insurance claim proceeds are invested by sumedha in a Balance fund. (Note: He is conservative expects 1% less return in a balance fund & 2% excess inflation for children higher education & Marriage expenses) (Mark 5)
4) Ashwin wants to know that additional life cover required today in case he is no more…He has informed you that annual growth in his income expects 10% P.A for 1st 10 years and post 8% pa till retirement. His self expenses 30% of household expenses and taxes payable Rs. 1,00,000. Post death Sumedha will invest corpus in 30% balanced fund & 70% in Debt instruments.(Mark 4)
5) Ashwin wants to know that approximate surplus/deficit amount in the retirement corpus once he has earmark PPF a/c (Post retirement corpus will be invested in Debt Instruments). You have advised to invest the maximum amount beginning of every year as per current guideline. You have further advised to extend the PPF a/c for three Blocks and also invest max. Amount end of every year during extended period. The maturity value of extended PPF A/C will be invested in riskfree instruments till retirement. (Mark 4)
6) You have suggested Mr. Ashwin to start a monthly investment on an immediate basis for Prateek and Aslia’s higher education till age 22 of Aslia as below in an Equity and Debt fund. He wants to know monthly SIP required in Equity & Debt fund?(5)
New investment and portfolio rebalanced as per below asset allocation on specific intervals.
95:05 (E:D) for 1st four years
75:25 (E:D) for next four years
50:50 (E:D) for next four years.
25:75 (E:D) till prateek’s age of 18
100% debt fund post age of 18 of Pratik.
Note: You have further advised to increase monthly SIP every year by 8%, in line with his expected income growth.
7) Calculate immediate annual investment required till one year before the retirement to build the retirement corpus for Mr. Ashwin. (Post retirement corpus will be investing 30% to debt fund, 20% in a balanced fund, 20% Gold ETF and 30% diversified equity fund) (Ignore taxation and expenses) ( Mark 5)
He will increase his annual investment 7.5% P.A. as per his income growth.
You have suggested below asset allocation for investment
1st 10 years 70% Equity and 30% Gold ETF
2nd 10 years 60% Equity and 40% Gold ETF
Balance years in 40% equity and 60% Gold ETF
8) You have suggested earmarking the 20% & 30% of an existing share portfolio for Pratik and aslia’s marriage. You have suggested weekly step up SIP (Annual Growth rate 5%pa) in existing Balanced Mutual fund till Aslia’s marriage?
Ashwin wants to know SIP required today? ( Mark 3)
9) Ashwin requires Rs.1, 00,000 beginning of every year till retirement for annual Diwali vacation expenses and post retirement, he wants Rs.2, 00,000 every year till his life time. He wants to know how much additional monthly SIP required in existing debt fund till his retirement. (Note Vacation cost is expected to escalate 8%PA) ( Mark 3)
atharva chitre said
hello, if you have got these solutions, could you please post them too?
I have my AFP exam in 20 days.
Preeti Chhatwal said
This sums i tried …i am trying more then i gv you as i solved ok ….
Preeti Chhatwal said
Hello,
2) Assume that Mr. Ashwin has got transferred to Nasik with an immediate effects and company offers him Rent free accommodation in lieu of HRA however Ashwin pays Rs. 3000/- concession rent to his company. The apartment is owned by company & also provides consumer durables cost Rs.1,00,000/-. Mr. Ashwin wants to know that taxable value of RFA & furniture perquisite. (As per 2001 population census, the city population was 08 Lakh, Depreciated value of furniture/consumer durables Rs. 87,220)
=Basic+DA+Taxable CA+EA
=60000+30000+(7500-1600)+7500=103400*12=1240800
7.5%RFA because population less then 10L=1240800*7.5%=93060 he paid 3000*12=93060-36000=57060+FA
=57060+10000=67060
Can any one confirm this ans
Preeti Chhatwal said
5)Ashwin wants to know that approximate surplus/deficit amount in the retirement corpus once he has earmark PPF a/c (Post retirement corpus will be invested in Debt Instruments). You have advised to invest the maximum amount beginning of every year as per current guideline. You have further advised to extend the PPF a/c for three Blocks and also invest max. Amount end of every year during extended period. The maturity value of extended PPF A/C will be invested in riskfree instruments till retirement. (Mark 4)
Ashwin age=34
7000*(1+4.5%)^(60-34)=219874.5
Then find PV till Sumedha life =82-57= 25 so ans will come 53582595 …(I)
Then PPF
=2019 to 2026 so 7 Years
Find FV for 7 year rate 7.75%, PMT= 150000,PV 6.20L = it will come 2476627
then it extend from 2026 to 2041= for 15 yrs FV(7.75%,15,-150000,2476627)=11582305
After that invested in risk free for 4 years
2041…2045
=11582305*(1+5%)^4=14078364….(II)
less I-II ans will come
9)Ashwin requires Rs.1, 00,000 beginning of every year till retirement for annual Diwali vacation expenses and post retirement, he wants Rs.2, 00,000 every year till his life time. He wants to know how much additional monthly SIP required in existing debt fund till his retirement. (Note Vacation cost is expected to escalate 8%PA) ( Mark 3)
=Till retirement 60-34=26
=pv((1+7.5%)/(1+8%)-1;26;-100000;0;1)=2756941….(I)
Post retirement 200000
=200000*(1+8%)^26=1479270.64 after find PV till lifetime 80-60 =20 Yrs, Rate (1+7.5%)/(1+8%)-1 , Pmt=1479270.64 = 30929889
after that find PV for 26 years Rate 7.5%, years-26,FV-30929889=4718003….(II)
Add I and II 7,474,944.86
and then less existing debt 7.67L= it will come 6,707,944.86
then find pmt for rate 7.5% for 26 yrs it will com 47560.
Preeti Chhatwal said
7)Calculate immediate annual investment required till one year before the retirement to build the retirement corpus for Mr. Ashwin. (Post retirement corpus will be investing 30% to debt fund, 20% in a balanced fund, 20% Gold ETF and 30% diversified equity fund) (Ignore taxation and expenses) ( Mark 5)
He will increase his annual investment 7.5% P.A. as per his income growth.
You have suggested below asset allocation for investment
1st 10 years 70% Equity and 30% Gold ETF
2nd 10 years 60% Equity and 40% Gold ETF
Balance years in 40% equity and 60% Gold ETF
Investing corpus Rate
Debt 30.00% 7.50% 2.25%
Balance F 20.00% 9.50% 1.90%
Gold 20.00% 6.00% 1.20%
Equity 30.00% 11.00% 3.30%
8.65% Total
Fmly household exp 70000*(1+4.5%)^(60-34)=219847 and then find PV till sumedha life time 82-57=25 years , rate=(1+8.6%)/(1+4.5)^(1/12)-1,PMT- 219847.. it will come 42223011.85….(I)
then find equity and debt …assume PMT 100 till 26 years
1st 10 years equity and debt will be fv(11%,10,-70,0,1)=1299.30 and fv(6%,10,-30,0,1)=419
same repeat for 2nd for equity fv(11%,10,-60;-1299,1) and same for debt and repeat for same as above so in end equity and debt will be 9333 and 2300 so total is
9333+2300= 11633 next step find rate for 26 year PMT 100 , FV=11633 ans will come 9.80%
Increasig SIP (1+9.80%)^26-(1+7.5%)^26/(9.80%-7.5%)=209.20*100=20920… (II)
cross multiply 100*42223011.85/20920=201827.
8) You have suggested earmarking the 20% & 30% of an existing share portfolio for Pratik and aslia’s marriage. You have suggested weekly step up SIP (Annual Growth rate 5%pa) in existing Balanced Mutual fund till Aslia’s marriage?
Ashwin wants to know SIP required today? ( Mark 3)
Step 1-Marriage of Prateek and alisha
Prateek and alisha 1800000*(1+7%)^(27-4)= 8532953.75 and same for alisha 10453235.26
Step 2 Existing Portflio 1832000
Prateek=(1832000*20%)= 366400 =366400*(1+11%)^23=4040024.29
Alisha = (1832000*30%)=549600 8287893.70
Then less
Prateek 8532953.75 -4040024.29785462= 4492929.45
same for alisha it will come 2165341.55
Step 3 It will go in Balance MF
Prateek 4492929.45550481/(1+9.50%)^23 =557191.98 same for alisha 204531.080 add both the amt of Prateek and alisha it will come 761723.06 then less existing Balance MFS 3.28L (761723.06-3.28L)= 433723.06
=433723*(1+9.5%)^26=4591764.59…..(I)
Step 4 find FV weekly =fv((1+9.5%)^(1/52)-1;52;-100;0)=5,448.02
=5,448.02 *(1+9.5%)^26-(1+5%)^26/(9.5%-5%)=851,244.67….(II)
Step 5 4591764.59/851,244.67 and multiply by 100 ans will come