CPWA Exam Topics Overview: Questions With Solutions
Code of Professional Responsibility - Fiduciary standard Right Ans -
Principles that require professionals to act in the best interest of the client,
disclose services, charges, and compensation, manage conflicts of interest,
provide necessary information to clients, maintain confidentiality, provide
competent service, comply with legal requirements, and maintain ethical
conduct.
Prospect Theory Right Ans - A theory that states individuals are more risk-
averse than pleasure-seeking, make decisions based on probability rather
than potential outcome, and use mental heuristics in decision-making.
Loss Aversion Right Ans - The tendency to feel losses more strongly than
gains.
Adaptive Market Hypothesis Right Ans - A theory that reconciles Efficient
Market Hypothesis with behavioral economics, stating that markets evolve
over time as individuals use evolutionary biases and heuristics to make
decisions, with survival being the primary objective.
Cognitive Dissonance Right Ans - Confusion or frustration experienced
when new information contradicts pre-existing beliefs or experiences.
Confirmation Bias Right Ans - The tendency to seek or value information
that confirms existing beliefs while ignoring or devaluing contradictory
information.
Representative Bias Right Ans - A cognitive bias where individuals process
new information using pre-existing ideas or beliefs, such as the Gambler's
Fallacy.
Mental Accounting Right Ans - The practice of treating various sums of
money differently based on how they are categorized, leading to biases like
the House Money Effect.
Anchoring and Adjustment Bias Right Ans - A bias influenced by initial
information received, where individuals rely too heavily on the first data
points when making decisions.
, Availability Bias Right Ans - A bias where easily recalled outcomes are
perceived as more likely, influencing decision-making.
Self-Attribution Bias Right Ans - The tendency to attribute success to
personal talents and blame failure on external factors.
Outcome Bias Right Ans - Making decisions based on past outcomes rather
than the process by which the outcome occurred.
Regret Aversion Bias Right Ans - The tendency to avoid decision-making
due to fear of making mistakes or holding onto losing positions.
Status Quo Bias Right Ans - The preference for maintaining current
conditions when faced with multiple options.
Endowment Bias Right Ans - Valuing objects more when one owns them,
leading to decision paralysis and reluctance to let go of inherited objects.
Ambiguity Bias Right Ans - Preferring choices with less ambiguity and
clearer outcomes.
Optimism Bias Right Ans - The belief that negative events are less likely to
happen to oneself.
Disposition Effect Right Ans - The tendency to sell winners too early and
hold onto losing investments for too long.
House Money Effect Right Ans - Taking more risks with gains, feeling like
one is playing with 'house money.'
SEC Requirements for Family Office Right Ans - Regulations stating that
family offices must serve only family clients, be wholly owned and controlled
by family members, and not hold out as investment advisers.
2024 % Deduction Limitation Rules Right Ans - Rules specifying deduction
percentages for different types of assets based on their characteristics and the
nature of the gift.
Code of Professional Responsibility - Fiduciary standard Right Ans -
Principles that require professionals to act in the best interest of the client,
disclose services, charges, and compensation, manage conflicts of interest,
provide necessary information to clients, maintain confidentiality, provide
competent service, comply with legal requirements, and maintain ethical
conduct.
Prospect Theory Right Ans - A theory that states individuals are more risk-
averse than pleasure-seeking, make decisions based on probability rather
than potential outcome, and use mental heuristics in decision-making.
Loss Aversion Right Ans - The tendency to feel losses more strongly than
gains.
Adaptive Market Hypothesis Right Ans - A theory that reconciles Efficient
Market Hypothesis with behavioral economics, stating that markets evolve
over time as individuals use evolutionary biases and heuristics to make
decisions, with survival being the primary objective.
Cognitive Dissonance Right Ans - Confusion or frustration experienced
when new information contradicts pre-existing beliefs or experiences.
Confirmation Bias Right Ans - The tendency to seek or value information
that confirms existing beliefs while ignoring or devaluing contradictory
information.
Representative Bias Right Ans - A cognitive bias where individuals process
new information using pre-existing ideas or beliefs, such as the Gambler's
Fallacy.
Mental Accounting Right Ans - The practice of treating various sums of
money differently based on how they are categorized, leading to biases like
the House Money Effect.
Anchoring and Adjustment Bias Right Ans - A bias influenced by initial
information received, where individuals rely too heavily on the first data
points when making decisions.
, Availability Bias Right Ans - A bias where easily recalled outcomes are
perceived as more likely, influencing decision-making.
Self-Attribution Bias Right Ans - The tendency to attribute success to
personal talents and blame failure on external factors.
Outcome Bias Right Ans - Making decisions based on past outcomes rather
than the process by which the outcome occurred.
Regret Aversion Bias Right Ans - The tendency to avoid decision-making
due to fear of making mistakes or holding onto losing positions.
Status Quo Bias Right Ans - The preference for maintaining current
conditions when faced with multiple options.
Endowment Bias Right Ans - Valuing objects more when one owns them,
leading to decision paralysis and reluctance to let go of inherited objects.
Ambiguity Bias Right Ans - Preferring choices with less ambiguity and
clearer outcomes.
Optimism Bias Right Ans - The belief that negative events are less likely to
happen to oneself.
Disposition Effect Right Ans - The tendency to sell winners too early and
hold onto losing investments for too long.
House Money Effect Right Ans - Taking more risks with gains, feeling like
one is playing with 'house money.'
SEC Requirements for Family Office Right Ans - Regulations stating that
family offices must serve only family clients, be wholly owned and controlled
by family members, and not hold out as investment advisers.
2024 % Deduction Limitation Rules Right Ans - Rules specifying deduction
percentages for different types of assets based on their characteristics and the
nature of the gift.
