CFP Exam Questions (Latest Update 2026 /
2027) with Verified Answers 100 % Correct
[Grade A]
When considering a diversified portfolio, which of the following is an appropriate
measure of risk?
A. Standard deviation
B. Beta
C. Covariance
D Coefficient of determination
E. Correlation coefficient - correct answer B. Beta
Beta is an appropriate measure of risk for a diversified portfolio. Standard deviation is
an appropriate measure of total risk for a non-diversified portfolio.
Mutual fund XYZ has a 5-year return of 12%, with a standard deviation of 15%. Fund XYZ
has a Beta of 1.4, with a correlation of .90 to the S&P. What Percent of the return from
fund XYZ is due to the S&P?
,A. 90%
B. 81%
C. 19%
D. 10% - correct answer B. 81%
Correlation =.90, therefore, r-squared = 0.81. 81% of the return is due to the market and
19% is due to unsystematic risk.
Stock index funds and exchange traded funds that track market indices are subject tow
which of the following risks?
A. Financial risk
B. Business risk
C. Systematic risk
D. Unsystematic risk
E. Diversifiable risk - correct answer C. Systematic risk
, Stock index funds and ETFs that track market indices are subject to systematic risk or
market risk, since they attempt to achieve market-type returns. all others are
examples of unsystematic, or diversifiable, risk.
Which of the following are non diversifiable risk?
1. business risk
2. management risk
3. company or industry risk
4. Market risk
5. interest rate risk
6. purchasing power risk
A. 4, 5, and 6
B. 1, 2, and 3
2027) with Verified Answers 100 % Correct
[Grade A]
When considering a diversified portfolio, which of the following is an appropriate
measure of risk?
A. Standard deviation
B. Beta
C. Covariance
D Coefficient of determination
E. Correlation coefficient - correct answer B. Beta
Beta is an appropriate measure of risk for a diversified portfolio. Standard deviation is
an appropriate measure of total risk for a non-diversified portfolio.
Mutual fund XYZ has a 5-year return of 12%, with a standard deviation of 15%. Fund XYZ
has a Beta of 1.4, with a correlation of .90 to the S&P. What Percent of the return from
fund XYZ is due to the S&P?
,A. 90%
B. 81%
C. 19%
D. 10% - correct answer B. 81%
Correlation =.90, therefore, r-squared = 0.81. 81% of the return is due to the market and
19% is due to unsystematic risk.
Stock index funds and exchange traded funds that track market indices are subject tow
which of the following risks?
A. Financial risk
B. Business risk
C. Systematic risk
D. Unsystematic risk
E. Diversifiable risk - correct answer C. Systematic risk
, Stock index funds and ETFs that track market indices are subject to systematic risk or
market risk, since they attempt to achieve market-type returns. all others are
examples of unsystematic, or diversifiable, risk.
Which of the following are non diversifiable risk?
1. business risk
2. management risk
3. company or industry risk
4. Market risk
5. interest rate risk
6. purchasing power risk
A. 4, 5, and 6
B. 1, 2, and 3
