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CFP QUESTIONS WITH DETAILED
VERIFIED ANSWERS
securities act of 1933 Ans: act that provided:
full disclosure to investors
prohibits fraud, deceit, and misrepresentations associated with sale of
securities
securities exchange act of 1934 Ans: act provided:
creation of SEC
prohibited insider trading
trust indenture act of 1939 Ans: act that required debt securities to be
registered if offered to the general public
investment company act of 1940 Ans: act that provided disclosure to
public about financial condition, investment objectives, and company
structure and operations
SEC Ans: regulates secondary market institutions as well as certain
primary market firms
advisers act of 1940 Ans: act establishing advisers must register with
SEC
planners with $100m of AUM must register with SEC
file from ADV if <$100m
investment advisors Ans: provide services for a fee
brokers/agents/RR Ans: transact trades and other business for a
comission
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Massachusetts Ans: state with first securites regulation in 1852
kansas Ans: first state to enact blue-sky laws
ERISA Ans: federal law that sets minimum standards for pension plans
(qualified plans) in private industry
established in 1974
Dodd-Frank Ans: gave the consumer finance protections bureau the
authority to regulate consumer financial products and services
2010
ch 7 Ans: bankruptcy: total consumer debt liquidation
ch 12 Ans: bankruptcy: reorganization by family farmers and
fisherpersons
ch 13 Ans: bankruptcy: consumer debt adjustments and repayments
ch 15 Ans: bankruptcy:reorganization in cross-border cases
50 Ans: when credit card is stolen, max out of pocket is $____
fairness, integrity, professionalism, objectivity Ans: 4 characteristics of a
fiduciary
1. establish relationship
2. gather data
3. analyze and evaluate financial status
4. develop and present recommendations
5. implement
6. follow up and monitor Ans: 6 steps in financial planning process
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environmental Ans: type of change imposed on clients like death,
disability, divorce
volitional Ans: type of change clients desire to make like college and
retirement
life cycle Ans: type of change based on life stages like school, career,
marriage
risk tolerance Ans: the trade-offs people are willing to make between
potential risks and rewards
stable
risk perception Ans: individual's assessment of the magnitude of risks
being traded off
unstable
risk capacity Ans: degree to which a client's financial resources can
cushion risks
rules of conduct Ans: sets forth the requirement that CFP professionals
must act as fiduciaries to their clients
cash flow management Ans: the purpose of
____________________________ is to efficiently meet current
consumption needs while maximizing capital for additional financial mgmt
activities needed to reach a client's financial objectives
65+ Ans: the "reinvention years" in a client's life are approximately:
minimize financing costs and maximize the likelihood of meeting financial
goals Ans: debt mgmt planning should:
55 to 65 Ans: during which life stage will a client feel most motivated
about preparing for retirement?
utility Ans: physical and psychological benefits derived from use of
goods or services
CFP QUESTIONS WITH DETAILED
VERIFIED ANSWERS
securities act of 1933 Ans: act that provided:
full disclosure to investors
prohibits fraud, deceit, and misrepresentations associated with sale of
securities
securities exchange act of 1934 Ans: act provided:
creation of SEC
prohibited insider trading
trust indenture act of 1939 Ans: act that required debt securities to be
registered if offered to the general public
investment company act of 1940 Ans: act that provided disclosure to
public about financial condition, investment objectives, and company
structure and operations
SEC Ans: regulates secondary market institutions as well as certain
primary market firms
advisers act of 1940 Ans: act establishing advisers must register with
SEC
planners with $100m of AUM must register with SEC
file from ADV if <$100m
investment advisors Ans: provide services for a fee
brokers/agents/RR Ans: transact trades and other business for a
comission
, Page | 2
Massachusetts Ans: state with first securites regulation in 1852
kansas Ans: first state to enact blue-sky laws
ERISA Ans: federal law that sets minimum standards for pension plans
(qualified plans) in private industry
established in 1974
Dodd-Frank Ans: gave the consumer finance protections bureau the
authority to regulate consumer financial products and services
2010
ch 7 Ans: bankruptcy: total consumer debt liquidation
ch 12 Ans: bankruptcy: reorganization by family farmers and
fisherpersons
ch 13 Ans: bankruptcy: consumer debt adjustments and repayments
ch 15 Ans: bankruptcy:reorganization in cross-border cases
50 Ans: when credit card is stolen, max out of pocket is $____
fairness, integrity, professionalism, objectivity Ans: 4 characteristics of a
fiduciary
1. establish relationship
2. gather data
3. analyze and evaluate financial status
4. develop and present recommendations
5. implement
6. follow up and monitor Ans: 6 steps in financial planning process
, Page | 3
environmental Ans: type of change imposed on clients like death,
disability, divorce
volitional Ans: type of change clients desire to make like college and
retirement
life cycle Ans: type of change based on life stages like school, career,
marriage
risk tolerance Ans: the trade-offs people are willing to make between
potential risks and rewards
stable
risk perception Ans: individual's assessment of the magnitude of risks
being traded off
unstable
risk capacity Ans: degree to which a client's financial resources can
cushion risks
rules of conduct Ans: sets forth the requirement that CFP professionals
must act as fiduciaries to their clients
cash flow management Ans: the purpose of
____________________________ is to efficiently meet current
consumption needs while maximizing capital for additional financial mgmt
activities needed to reach a client's financial objectives
65+ Ans: the "reinvention years" in a client's life are approximately:
minimize financing costs and maximize the likelihood of meeting financial
goals Ans: debt mgmt planning should:
55 to 65 Ans: during which life stage will a client feel most motivated
about preparing for retirement?
utility Ans: physical and psychological benefits derived from use of
goods or services
