Behavioral Finance and Financial Planning
Principles for CFP Exam UPDATED ACTUAL
Questions and CORRECT Answers
A field of study that examines the psychological
Behavioral Finance
influences on investors and financial markets.
Mental shortcuts or rules of thumb that simplify
Heuristics
decision making.
A structured approach to managing an individual's or
Financial Planning Process
organization's financial resources.
Purpose of Financial To help individuals achieve their financial goals
Planning through effective resource management.
, Benefits of Financial Improved financial security, better decision making,
Planning and increased likelihood of achieving financial goals.
Responsibilities in Duties owed to clients, firms, subordinates, and the
Financial Planning CFP Board.
A set of guidelines that outlines the ethical and
Code of Conduct
professional standards for financial planners.
Standards of Conduct: Obligations that financial planners have to act in the
Duties Owed to Clients best interests of their clients.
Standards of Conduct: Responsibilities that financial planners have towards
Duties Owed to Firms and their employers and team members.
Subordinates
The processes followed by the CFP Board to address
CFP Board Disciplinary
violations of the Code of Ethics and Standards of
Procedures
Conduct.
Formal records of the financial activities and position
Financial Statements
of a business, person, or entity.
The process of monitoring, analyzing, and optimizing
Cash Flow Management
net cash inflows and outflows.
The concept that money available today is worth
Time Value of Money more than the same amount in the future due to its
potential earning capacity.
The current worth of a future sum of money or stream
Present Value
of cash flows given a specified rate of return.
The value of a current asset at a specified date in the
Future Value
future based on an assumed rate of growth.
The return on an investment after adjusting for
Real Rate of Return
inflation.
Cash flows that are not consistent in amount or timing,
Unequal Cash Flows
often analyzed using IRR or Net Present Value.
Payments made in a series over time, often used in
Serial Payments
loans or annuities.
Principles for CFP Exam UPDATED ACTUAL
Questions and CORRECT Answers
A field of study that examines the psychological
Behavioral Finance
influences on investors and financial markets.
Mental shortcuts or rules of thumb that simplify
Heuristics
decision making.
A structured approach to managing an individual's or
Financial Planning Process
organization's financial resources.
Purpose of Financial To help individuals achieve their financial goals
Planning through effective resource management.
, Benefits of Financial Improved financial security, better decision making,
Planning and increased likelihood of achieving financial goals.
Responsibilities in Duties owed to clients, firms, subordinates, and the
Financial Planning CFP Board.
A set of guidelines that outlines the ethical and
Code of Conduct
professional standards for financial planners.
Standards of Conduct: Obligations that financial planners have to act in the
Duties Owed to Clients best interests of their clients.
Standards of Conduct: Responsibilities that financial planners have towards
Duties Owed to Firms and their employers and team members.
Subordinates
The processes followed by the CFP Board to address
CFP Board Disciplinary
violations of the Code of Ethics and Standards of
Procedures
Conduct.
Formal records of the financial activities and position
Financial Statements
of a business, person, or entity.
The process of monitoring, analyzing, and optimizing
Cash Flow Management
net cash inflows and outflows.
The concept that money available today is worth
Time Value of Money more than the same amount in the future due to its
potential earning capacity.
The current worth of a future sum of money or stream
Present Value
of cash flows given a specified rate of return.
The value of a current asset at a specified date in the
Future Value
future based on an assumed rate of growth.
The return on an investment after adjusting for
Real Rate of Return
inflation.
Cash flows that are not consistent in amount or timing,
Unequal Cash Flows
often analyzed using IRR or Net Present Value.
Payments made in a series over time, often used in
Serial Payments
loans or annuities.
