CFP Exam Verified Exam Questions and Answers Latest update 2026/2027

CFP Exam
Verified Exam Questions and Answers Latest update 2026/2027

Question:
1. principles
Answer:
The Code is organized around principles. How to remember HINT: IOC/FCPD
Integrity (#1)
objectivity (#2)
competence (#3)
Fairness (#4)
Confidentiality (#5)
Professionalism (#6)
Diligence (#7)

Question:
2. Personal Finan-
cial Statements
Answer:
Cash/ Equivalents
Investments ( collectibles for inv purposes)
Use assets - at FMV
Liabilities
*NOTE - Life Insurance cash value is not part of investment assets or emergency
fund on exam*

Question:
3. Encumbrance
Answer:
Liability

Question:
4. Statement of fi-
nancial position
Answer:
includes balance sheet, cash flow

Question:
5. emergency fund 3-6 months of real estate taxes, fixed and variable expenses
3- single second source of income / married both work and similar wages /
married only one works but second source of income

,Answer:


Question:
The emergency fund is invested in the following.
- checking accounts (excluding funds to be utilized for necessary expenses)
- government money market accounts
- savings accounts
- CDs if close to maturity < 90 days
- laddered CDs < 6 months
* If the checking account exceeds the normal monthly expenses, subtract one
month of expenses. If the normal monthly expenses exceed the funds in the
checking account, you should ignore the negative number. For example, if normal
monthly expenses are $5,000 and the clients only have $4,000 in their checking
account, then the checking account balance isn't usable. However, don't subtract
$1,000.
Answer:
6 months- single wage earner/ married only one spouse works
lifestyle and risk tolerance take precedence - can be lower but try to stay liquid
investments
Emergency fund

Question:
6. Debt Mgt PITI (housing expense or rent) less than 28% of gross income
PITI
Answer:
prinicpal interest taxes insurance

Question:
PITI / gross income = %
*use all income for PITI ratio*
Answer:


Question:
Total monthly debt < 36% of gross income (maybe tested)
Answer:


Question:
Consumer debt < 20% of net income (probably not tested)

,Answer:


Question:
PITI is the most important calculation.
Answer:


Question:
Total monthly debt includes housing expense, Auto loans, and credit card debt,
etc. That is rarely or never asked.
Answer:


Question:
NOTE: Do not subtract 401(k) contributions when calculating gross income.
Answer:


Question:
7.
Savings
Answer:
at least 5-8% of income ideal
Savings is the excess of cash inflows over cash outflows after taxes.

Question:
8. Bank
Answer:
regulator - comptroller of currency, fed, fdic (federal chartered)

Question:
9. Savings and Loan Typically, the S&Ls acquire funds through time deposits. Funds are then
used to
make mortgage loans.
Answer:
state chartered - fdic, state, fed

Question:
(S&L) or Thrifts

, Answer:
Like banks, S&Ls may be federally or state chartered and are now regulated by a
branch of the FDIC and the Federal Home Bank Board.
The Federal Deposit Insurance Reform Act of 2005 merges the Savings Association
Insurance Fund (SAIF) and the Bank Insurance Fund (BIF) into the new Deposit
Insurance Fund. Coverage depends on the titling (ownership) of the account.
Coverage is accumulative per titling .
Single accounts - $250,000 coverage per titling, not per account

Question:
10. Current ratio
Answer:
Current ratio = current assets : current liabilities
ca : Cash equivalents, marketable securities, accounts receivable, and inventory
cl : Accounts payable, credit card debt, and taxes payable -
Always use credit card debt even if the credit cards are paid ott monthly.
Only use taxes payable when the material indicates the taxes are due or the
material actually says the taxes are payable. In regards to mortgages it is only
used when the data tells you the "current amount" of the mortgage due.

Question:
11. securities act
Answer:
new issues detailed prospectus - full and fair disclosure of risks

Question:
1933
Answer:


Question:
12. act of 1934
Answer:
secondary market - created SEC

Question:
13. investment act of sec regulates unit investment trusts, manage investment companies and
variable
life and annuities
1940