Ace the CFP Exam: High-Yield Questions & Topic Reviews (2025–2026)
About This Guide:
This CFP Exam Prep Guide is built to help you pass the Certified Financial Planner® exam with
confidence. Covering all eight domains tested by the CFP Board, it includes realistic, exam-style practice
questions, detailed explanations, and study strategies tailored to finance professionals and serious test-
takers. Perfect for first-time exam takers or as a final review tool.
_____________ are amortized under a tax section called Section 197. - ✔✔-Intangibles
± 1,700 stocks equally weighted - ✔✔-What is Value Line?
30 industrial stocks - price weighted - ✔✔-What is Dow Jones?
A __________ is a deposit in any foreign bank that is denominated in dollars. - ✔✔-Eurodollar
A _____________ is a dollar-denominated bond issued in the U.S. by foreign banks and corporations. -
✔✔-Yankee bond
a cognitive error identified in behavioral economics whereby people incorrectly believe that recent events
will occur again soon.
the tendency for people to overweight new information or events without considering the objective
probabilities of those events over the long run. - ✔✔-What is recency bias (availability bias)?
A condition that may create or increase the chance of loss arising from a peril.
Ex.
- Owning a home on an earthquake fault
- Owning a home by a river - ✔✔-What is a Hazard?
A condition where there is a possibility of loss (a situation where exposure to loss exists).
,Ex.
- Starting a business
- Buying real estate - ✔✔-What is a Risk?
A deliberately performed act such as assault, battery, libel, slander, or false arrest - ✔✔-Intentional tort
A disabled beneficiary may be the beneficiary of only ____ ABLE account - ✔✔-1
A situation in which a high degree of care is imposed on the land occupier for certain conditions on the
land (a pool that isn't screened in, vacant land where children play, land with access to a river or lake) -
✔✔-Attractive nuisance
A situation where the standard of care is set by a statute (school zones and crosswalks) - ✔✔-Negligence
per se
A trust may be Defective / Tainted for Income Tax and Estate Tax purposes if the Grantor retains... - ✔✔-
- A Right to Income or the Right to Use/Enjoy Trust property (Beneficial Enjoyment)
- A Reversionary Interest exceeding 5% (Retained Interest)
A wrongful act other than a breach of contract for which a civil action may be brought against the
tortfeasor. Generally regarded as a crime. - ✔✔-Tort
administrative interpretation/may be cited - ✔✔-What are revenue rulings and revenue procedures?
After a prolonged period of solid returns, the stock market declines by 15%. Immediately thereafter, all
kinds of "experts" appear on television and in the mass media, proclaiming that we were long overdue for
a correction, as if the decline were obvious and inevitable. But where were these experts before the event?
If it was so obvious, why weren't they speaking up before the market took a dive? If it was so obvious,
why didn't investors start cashing out just prior to the sell-off? Hindsight biases also regularly manifest
themselves between investment advisors and their clients. Once the reasons why an investment performed
,poorly are understood, it becomes difficult to understand why it wasn't avoided. - ✔✔-What is an
example of Hindsight Bias?
Age at which early distribution penalties may no longer apply to qualified plan distributions - ✔✔-55
Age at which kiddie tax is no longer imposed on unearned income - ✔✔-18 or 24
Age at which life insurance policies generally endow - ✔✔-100 or 121
Age that catch-up contributions are allowed for IRAs and 401ks: - ✔✔-50
An extra hazardous condition which results in losses to others. (Keeping of wild animals, workers comp)
- ✔✔-Absolute Liability
An individual erroneously believes that the onset of a certain random event is likely to happen following
an event or a series of events.
Example: Some investors believe that they should liquidate a position after it has gone up in a series of
subsequent trading sessions because they do not believe that the position is likely to continue going up.
Conversely, other investors might hold on to a stock that has fallen in multiple sessions because they view
further declines as improbable. The solution is investors should base their decisions on analysis. - ✔✔-
What is Gambler's Fallacy?
An investor reads a study that says short-term mutual fund winners tend to persist. On that basis he
decides to invest in several top funds from the prior year, and to revisit his holdings the following year. A
few funds do well, but one collapses as its highly specific investment and aggressive style falls out of
favor, leading to poor overall results. - ✔✔-What is an example of Overweighting the Recent Past?
An investor sells a strong-performing winner to lock in gains, without considering whether the investment
remains attractive or whether a more attractive investment option exists. It turns out that the company is
well managed with strong fundamentals, and even after the sale it continues to perform well. Meanwhile,
the investor has held on to another loser, and used some of the proceeds from the sale of his winner to add
to his holding in the loser in the hopes that even a partial rebound will cover the loss. - ✔✔-What is an
example of Loss Aversion and risk taking?
, Annual Coupon: Remember duration is ________ related to coupon rate - ✔✔-inversely
Remember, Coupon and Yield are Interest Rates - Inversely Related.
Any contributory negligence of the injured party will not bar recovery of damages if the other party,
immediately prior to the accident, had a last clear chance to prevent the accident but failed to do so. (Rear
end someone when you could have avoided it by swerving, braking in time, road rage) - ✔✔-Last clear
chance
Any degree of negligence on the part of the injured party does not defeat the claim but is used in some
manner to mitigate damages payable by the other party. (A is 20% negligent, B is 80%) - ✔✔-
Comparative negligence
Any negligence on the part of the injured party, although slight, defeats the claim. (jay walking, being
drunk) - ✔✔-Contributory negligence
apply to a specific taxpayer - ✔✔-What are private letter rulings?
Are mutual funds marketable? - ✔✔-No they are redeemed
arises out of negligence of the principal in allowing the agent to appear to have the authority because of
certain actions of the agent in the past. This typically affects terminated agents. - ✔✔-What is apparent
authority?
As a general rule, the debt-to-income ratio should not exceed what percentage of monthly gross income? -
✔✔-36%
As a general rule, the housing cost ratio (PITI) should not exceed what percentage of gross monthly
income? - ✔✔-28%
About This Guide:
This CFP Exam Prep Guide is built to help you pass the Certified Financial Planner® exam with
confidence. Covering all eight domains tested by the CFP Board, it includes realistic, exam-style practice
questions, detailed explanations, and study strategies tailored to finance professionals and serious test-
takers. Perfect for first-time exam takers or as a final review tool.
_____________ are amortized under a tax section called Section 197. - ✔✔-Intangibles
± 1,700 stocks equally weighted - ✔✔-What is Value Line?
30 industrial stocks - price weighted - ✔✔-What is Dow Jones?
A __________ is a deposit in any foreign bank that is denominated in dollars. - ✔✔-Eurodollar
A _____________ is a dollar-denominated bond issued in the U.S. by foreign banks and corporations. -
✔✔-Yankee bond
a cognitive error identified in behavioral economics whereby people incorrectly believe that recent events
will occur again soon.
the tendency for people to overweight new information or events without considering the objective
probabilities of those events over the long run. - ✔✔-What is recency bias (availability bias)?
A condition that may create or increase the chance of loss arising from a peril.
Ex.
- Owning a home on an earthquake fault
- Owning a home by a river - ✔✔-What is a Hazard?
A condition where there is a possibility of loss (a situation where exposure to loss exists).
,Ex.
- Starting a business
- Buying real estate - ✔✔-What is a Risk?
A deliberately performed act such as assault, battery, libel, slander, or false arrest - ✔✔-Intentional tort
A disabled beneficiary may be the beneficiary of only ____ ABLE account - ✔✔-1
A situation in which a high degree of care is imposed on the land occupier for certain conditions on the
land (a pool that isn't screened in, vacant land where children play, land with access to a river or lake) -
✔✔-Attractive nuisance
A situation where the standard of care is set by a statute (school zones and crosswalks) - ✔✔-Negligence
per se
A trust may be Defective / Tainted for Income Tax and Estate Tax purposes if the Grantor retains... - ✔✔-
- A Right to Income or the Right to Use/Enjoy Trust property (Beneficial Enjoyment)
- A Reversionary Interest exceeding 5% (Retained Interest)
A wrongful act other than a breach of contract for which a civil action may be brought against the
tortfeasor. Generally regarded as a crime. - ✔✔-Tort
administrative interpretation/may be cited - ✔✔-What are revenue rulings and revenue procedures?
After a prolonged period of solid returns, the stock market declines by 15%. Immediately thereafter, all
kinds of "experts" appear on television and in the mass media, proclaiming that we were long overdue for
a correction, as if the decline were obvious and inevitable. But where were these experts before the event?
If it was so obvious, why weren't they speaking up before the market took a dive? If it was so obvious,
why didn't investors start cashing out just prior to the sell-off? Hindsight biases also regularly manifest
themselves between investment advisors and their clients. Once the reasons why an investment performed
,poorly are understood, it becomes difficult to understand why it wasn't avoided. - ✔✔-What is an
example of Hindsight Bias?
Age at which early distribution penalties may no longer apply to qualified plan distributions - ✔✔-55
Age at which kiddie tax is no longer imposed on unearned income - ✔✔-18 or 24
Age at which life insurance policies generally endow - ✔✔-100 or 121
Age that catch-up contributions are allowed for IRAs and 401ks: - ✔✔-50
An extra hazardous condition which results in losses to others. (Keeping of wild animals, workers comp)
- ✔✔-Absolute Liability
An individual erroneously believes that the onset of a certain random event is likely to happen following
an event or a series of events.
Example: Some investors believe that they should liquidate a position after it has gone up in a series of
subsequent trading sessions because they do not believe that the position is likely to continue going up.
Conversely, other investors might hold on to a stock that has fallen in multiple sessions because they view
further declines as improbable. The solution is investors should base their decisions on analysis. - ✔✔-
What is Gambler's Fallacy?
An investor reads a study that says short-term mutual fund winners tend to persist. On that basis he
decides to invest in several top funds from the prior year, and to revisit his holdings the following year. A
few funds do well, but one collapses as its highly specific investment and aggressive style falls out of
favor, leading to poor overall results. - ✔✔-What is an example of Overweighting the Recent Past?
An investor sells a strong-performing winner to lock in gains, without considering whether the investment
remains attractive or whether a more attractive investment option exists. It turns out that the company is
well managed with strong fundamentals, and even after the sale it continues to perform well. Meanwhile,
the investor has held on to another loser, and used some of the proceeds from the sale of his winner to add
to his holding in the loser in the hopes that even a partial rebound will cover the loss. - ✔✔-What is an
example of Loss Aversion and risk taking?
, Annual Coupon: Remember duration is ________ related to coupon rate - ✔✔-inversely
Remember, Coupon and Yield are Interest Rates - Inversely Related.
Any contributory negligence of the injured party will not bar recovery of damages if the other party,
immediately prior to the accident, had a last clear chance to prevent the accident but failed to do so. (Rear
end someone when you could have avoided it by swerving, braking in time, road rage) - ✔✔-Last clear
chance
Any degree of negligence on the part of the injured party does not defeat the claim but is used in some
manner to mitigate damages payable by the other party. (A is 20% negligent, B is 80%) - ✔✔-
Comparative negligence
Any negligence on the part of the injured party, although slight, defeats the claim. (jay walking, being
drunk) - ✔✔-Contributory negligence
apply to a specific taxpayer - ✔✔-What are private letter rulings?
Are mutual funds marketable? - ✔✔-No they are redeemed
arises out of negligence of the principal in allowing the agent to appear to have the authority because of
certain actions of the agent in the past. This typically affects terminated agents. - ✔✔-What is apparent
authority?
As a general rule, the debt-to-income ratio should not exceed what percentage of monthly gross income? -
✔✔-36%
As a general rule, the housing cost ratio (PITI) should not exceed what percentage of gross monthly
income? - ✔✔-28%
