Combination Type Questions

Let's take a look at another type of multiple choice question used on the CFP® Certification Examinations. The next type is the "combination" question, such as the following question:

2. Tax and non-tax advantages of S corporations include the fact they:      (1) provide limited personal liability      (2) are separate taxable entities      (3) allow a pass-through of income and losses to shareholders      (4) permit losses which may be limited by passive activity loss rules

A. (1), (2), and (3) only
B. (1), (3), and (4) only
C. (2) and (3) only
D. (3) only

This "combination" question is really four true-false questions combined in one multiple choice question. Notice that choice (3) is included in all choices, so you know that choice is a correct one. You don't have to agonize over it. Notice also that choice (2) is included in two of the four choices. If you know that choice (2) is incorrect, you have narrowed the choices to only two. Your chances of getting the right answer have increased from 25% to 50%. You can make an educated guess. Make a selection, mark the question for review, and move on to the next question. For the questions you have narrowed to two choices, you will probably get about half of them right. The correct answer to question 2 is (B).