NEW 2026 Certification Sample Questions AFP-Exam-1 Dumps & Practice Exam [Q45-Q69]

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NEW 2026 Certification Sample Questions AFP-Exam-1 Dumps & Practice Exam

AFP-Exam-1 Deluxe Study Guide with Online Test Engine

CSI AFP-Exam-1 Exam Syllabus Topics:

Section	Weight	Objectives
Topic 1: Technical Competencies	84%	– Tax Planning – Risk Management and Insurance – Investment Planning – Asset and Liability Management – Estate Planning – Retirement Planning
Topic 2: Enabling Competencies	16%	– Professional Conduct and Regulatory Compliance – Client Relationship and Practice Management

NEW QUESTION 45
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?

The client’s health may deteriorate as she gets older.

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

It is better suited for long term insurance needs.

The cost of premiums is lower than whole life.

NEW QUESTION 46
Tom has two children from a previous marriage. He has been paying $1,000 per month for spousal support and $1,500 per month for child support to his ex-wife. Recently, his ex-wife was awarded increased child support payments from Tom to cover unanticipated university expenses for one of the children. What should Tom’s financial planner advise him about how this increased monthly payment may impact his finances?

Net cash flow will be reduced equal to the amount of the extra child support payments, less the tax deduction.

The increased amount Tom pays in child support will result in a larger tax credit at the end of the year.

Net cash flow will be reduced equal to the full amount of the extra child support payments.

The tuition tax credit for his child’s post-secondary education will be applied towards Tom’s taxes.

NEW QUESTION 47
Lois is reviewing her client Raj’s retirement plan. To stay on track, Raj’s TFSA (with a current balance of
$10,000) will need to be worth $42,000 in five years. Raj is able to contribute his annual bonus of $5,000 at the end of each year. For Raj to stay on plan, what rate of return does Lois need to be targeting?

5.71%.

5.64%.

6.36%.

7.67%.

NEW QUESTION 48
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?

Annual earnings data.

Personal net worth statement.

Past investment experiences.

Stock option plan details.

NEW QUESTION 49
What key question should be answered during the recommending strategies stage of the financial planning process?

How can the client achieve her goals?

Are the client’s goals feasible?

What are the client’s needs and goals?

How and by whom will the planner be compensated?

NEW QUESTION 50
Bill is reviewing his credit bureau after being declined for a loan. He believes a loan that does not belong to him is appearing on the report. Which section should he review most closely?

Inquiries.

Public record information.

Account history or trade lines.

Personal identification only.

NEW QUESTION 51
John and Jerry’s financial planner have recommended they review their budget. What is the primary purpose of the budget?

To understand cash inflows and outflows each year.

To determine which expenses to reduce or eliminate.

To determine the TDS.

To create a savings plan.

NEW QUESTION 52
A client borrows $100,000 to invest in a non-registered portfolio expected to generate interest and dividend income. What tax principle is most relevant?

Interest on borrowed money may be deductible when the funds are used to earn income from property.

Loan interest is never deductible for individuals.

The investment income becomes tax-free because leverage is used.

Interest deductibility applies only to TFSA contributions.

NEW QUESTION 53
Francois and Brigitte are meeting with their financial planner, Robin. They would like to ensure that if one of them were to die suddenly that their mortgage would be paid in full. Their current mortgage has an outstanding balance of $400,000 with 10 years remaining. The couple are in good health and have a well- balanced financial plan that focuses on debt reduction and savings. Which type of insurance policy should Robin recommend to assist the couple in meeting their objective?

Joint 10-year term first-to-die policy.

Joint whole life last-to-die policy.

Joint 10-year term last-to-die policy.

Joint whole life first-to-die policy.

NEW QUESTION 54
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?

No future growth can occur in the corporation.

The owner’s retained preferred shares may not provide adequate income or inflation protection.

The children can never benefit from future growth.

The freeze automatically eliminates all tax at death.

NEW QUESTION 55
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?

The client’s health may deteriorate as she gets older.

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

It is better suited for long term insurance needs.

The cost of premiums is lower than whole life.

NEW QUESTION 56
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.

Home equity line of credit with an interest rate of 3.75% and a 7-year interest-only payment with an end-of-term balloon payment.

Secured corporate loan with an interest rate of 5.25% and a 5-year amortization period.

Corporate mortgage with an interest rate of 2.25% and a 25-year amortization period.

Refinanced personal mortgage with an interest rate of 1.35% and a 25-year amortization period.

NEW QUESTION 57
Bill was recently declined for a loan application at his financial institution, and he is concerned that a liability has been added to his credit bureau that does not belong to him. He asks his financial planner to review his credit bureau with him to help him identify why he may have been declined. Which area of the credit bureau might his financial planner advise Bill to review?

Number of previous declines.

Inquiries.

Account history.

Public record information.

NEW QUESTION 58
Two shareholders sign a buy-sell agreement requiring the surviving shareholder to purchase the deceased shareholder’s shares at fair market value. What planning tool most directly funds the death-triggered purchase obligation?

A shareholder RRSP.

Corporate-owned or cross-owned life insurance.

A personal line of credit in the surviving shareholder’s name only.

Travel accident insurance.

NEW QUESTION 59
Evan meets with his financial planner to review his concerns around inflation and its impact on his TFSA investment portfolio. His financial planner researches the current holdings and recommends that he sells one of the portfolio’s equity funds. Which replacement option should the financial planner recommend to Evan?

Real estate investment trusts.

Guaranteed investment certificates.

Gold bullion.

Treasury bills.

NEW QUESTION 60
William and Jennifer are selling their business which qualifies as a Canadian-controlled private corporation.
When the sale is complete at the end of this year, William and Jennifer will each receive $4 million for their common shares which have nominal cost. Jennifer has unused capital losses from previous years. They are meeting with Laurel, their financial planner, to discuss the tax implications of the sale. Based on the information provided, what should Laurel recommend to William and Jennifer so that they are best able to make use of the Lifetime Capital Gains Exemption?

They should each claim 50% of the exemption.

They should each claim 100% of the exemption.

Only Jennifer should claim 100% of the exemption.

Only William should claim 100% of the exemption.

NEW QUESTION 61
A client refuses to provide details about debt balances, tax returns, and monthly expenses but asks the planner to confirm whether retirement at age 55 is achievable. What should the planner do?

Use generic assumptions and present the plan as reliable.

Proceed only with investment recommendations.

Explain that the conclusion will be limited or unreliable without the missing information.

Estimate the figures secretly from the client’s age and income.

NEW QUESTION 62
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?

The TFSA.

The LIRA.

The line of credit.

The RRSP.

NEW QUESTION 63
In which life cycle stage would a financial planner identify his client to be if they have a high mortgage balance and an unstable or lower income, and are willing to take on investment risk because of their longer time horizon?

Financial independence.

Accumulation.

Consolidation.

Gifting.

NEW QUESTION 64
Wendy, age 60, has a holding company whose sole asset is a commercial property. The property appreciated considerably in value over the last 10 years, and she expects the property value will continue to grow. Wendy is concerned about the tax implications this may have when she dies and leaves the property to her children.
What strategy should Wendy’s financial planner recommend to her?

Sell the property to her children below market value.

Gift common shares to her children and retain majority ownership.

Transfer the common shares of the company into joint name with her children.

Conduct an estate freeze.

NEW QUESTION 65
Leena and Harry are married and hold RRSPs with a value exceeding $500,000. They are concerned about their final tax liability and want to cover the taxes after they have both died. What would their financial planner recommend them to implement in order for the couple to achieve the objective?

Purchase a joint last-to-die permanent life insurance policy.

Set up a testamentary trust through their wills.

Update the beneficiary of the RRSP plans to each other.

Transfer the funds into an inter vivos trust.

NEW QUESTION 66
During implementation, a client agrees to update her will, purchase disability insurance, and increase RRSP contributions. Which statement best describes the planner’s role?

Clarify responsibilities, timelines, and any required referrals or product steps.

Complete the will without involving a lawyer.

Assume the client will implement everything without follow-up.

Focus only on the RRSP contribution because it creates an investment transaction.

NEW QUESTION 67
Ram Patel, age 65, is meeting with his financial planner, Maria Romano, to complete a financial plan. Ram is retiring this year, and his company provides a defined benefit pension plan. Upon retirement, he has the choice of receiving $20,000 each year for 20 years or until death (whichever is earlier), or he can take
$304,300, which is the commuted value at retirement. Ram has confirmed that he will be transferring the commuted value to a LIRA. After further discovery, Maria suggests that they utilize a 5% market rate of return and project the funds to last 25 years. What should Maria update Ram’s projected annual retirement income to?

$24,418.

$20,000.

$21,591.

$21,000.

NEW QUESTION 68
A retiree holds most of her investments in interest-bearing GICs inside a non-registered account while her TFSA is invested in cash. She has unused TFSA room and wants to improve after-tax efficiency without increasing total portfolio risk materially. What should the planner consider?

Holding more interest-bearing assets inside the TFSA.

Moving all assets into speculative equities.

Withdrawing RRIF minimums and gifting them immediately.

Borrowing to invest in the non-registered account.

NEW QUESTION 69
Kendrick, age 55, owns a successful small business, ZXC Inc., valued at $800,000. Kendrick has extensive savings outside of the business and would like to pass the company onto his son at some point in the future.
Kendrick expects the business to increase in value $25,000 per year. If Kendrick decides to use an estate freeze to reduce the amount of taxes he will be required to pay, his financial planner should recommend that he implement the estate freeze at which point in relation to gifting the business to his son?

To take effect at the time of his passing.

One month prior to gifting the company.

Immediately.

At the same time as gifting the company.