CFP Exam 2025 Containing Revision Questions And Answers
Financial Planning - AnswersA collaborative process that helps maximize a Client's potential for
meeting life goals through Financial Advice that integrates relevant elements of the Client's
personal and financial circumstances.
Automatic Bars from CFP Board - Answers
Suspensions (not Bars) from CFP Board - Answers
Who sets Monetary Policy? - AnswersFederal Reserve
Who sets Fiscal Policy? - AnswersCongress and the President
Explain the purpose and powers of the Federal Reserve. - Answers
Explain the purpose and powers of Congress in regards to Fiscal Policy. - Answers
Name all of the student loan types. - Answers
Dividend Payout Ratio - AnswersCommon Stock Dividend / EPS
Return on Equity (ROE) - AnswersEPS / Stockholder's Equity per Share
Dividend Yield Formula - AnswersDividend / Stock Price
Price-Earnings Ratio - AnswersPrice per Share / EPS
Price to Earnings Growth Ratio - AnswersStocks P/E Ratio / 3-5 Year Growth in Earnings
,CFP Exam 2025 Containing Revision Questions And Answers
Dividend Discount Model - AnswersV = Next period's dividend / (req. rate of return - dividend
growth rate)
(on formula sheet)
next div = current div(1+growth rate)
Expected Rate of Return - AnswersRate of Return = (Next period's dividend / market price) +
dividend growth rate
Net Present Value NPV - AnswersPV of CF - Initial Cost
positive = invest
0 = invest
negative = do not invest
Holding Period Return HPR - Answers(Selling Price - Purchase Price +/- CF) / Purchase price or
Equity invested
List all Systematic Risks - AnswersPRIME
Purchasing power risk
Reinvestment rate risk
Interest rate risk
Market risk
Exchange rate risk
List all Unsystematic Risks - AnswersABCDEFG
Accounting Risk
Business Risk
, CFP Exam 2025 Containing Revision Questions And Answers
Country Risk
Default Risk
Executive Risk
Financial Risk
Government/Regulation Risk
Beta - Answersmeasures volatility of a security relative to market
1 = market
>1 = more volatile than market
<1 = less volatile than market
only use when R-squared is less than 0.7
Coefficient of Variation - AnswersSD / Average Return
useful in determining which investment has more risk.
tells us the probability of actually experiencing a return close to the average return
Four basis premises of Traditional Finance - Answers- markets are efficient
- investors are rational
- the mean-variance portfolio theory governs
- returns are determined by risk
Four basic premises of Behavioral Finance - Answers- markets are inefficient
- investors are irrational
- the Behavioral Portfolio Theory governs
- risk alone does not determine returns
Financial Planning - AnswersA collaborative process that helps maximize a Client's potential for
meeting life goals through Financial Advice that integrates relevant elements of the Client's
personal and financial circumstances.
Automatic Bars from CFP Board - Answers
Suspensions (not Bars) from CFP Board - Answers
Who sets Monetary Policy? - AnswersFederal Reserve
Who sets Fiscal Policy? - AnswersCongress and the President
Explain the purpose and powers of the Federal Reserve. - Answers
Explain the purpose and powers of Congress in regards to Fiscal Policy. - Answers
Name all of the student loan types. - Answers
Dividend Payout Ratio - AnswersCommon Stock Dividend / EPS
Return on Equity (ROE) - AnswersEPS / Stockholder's Equity per Share
Dividend Yield Formula - AnswersDividend / Stock Price
Price-Earnings Ratio - AnswersPrice per Share / EPS
Price to Earnings Growth Ratio - AnswersStocks P/E Ratio / 3-5 Year Growth in Earnings
,CFP Exam 2025 Containing Revision Questions And Answers
Dividend Discount Model - AnswersV = Next period's dividend / (req. rate of return - dividend
growth rate)
(on formula sheet)
next div = current div(1+growth rate)
Expected Rate of Return - AnswersRate of Return = (Next period's dividend / market price) +
dividend growth rate
Net Present Value NPV - AnswersPV of CF - Initial Cost
positive = invest
0 = invest
negative = do not invest
Holding Period Return HPR - Answers(Selling Price - Purchase Price +/- CF) / Purchase price or
Equity invested
List all Systematic Risks - AnswersPRIME
Purchasing power risk
Reinvestment rate risk
Interest rate risk
Market risk
Exchange rate risk
List all Unsystematic Risks - AnswersABCDEFG
Accounting Risk
Business Risk
, CFP Exam 2025 Containing Revision Questions And Answers
Country Risk
Default Risk
Executive Risk
Financial Risk
Government/Regulation Risk
Beta - Answersmeasures volatility of a security relative to market
1 = market
>1 = more volatile than market
<1 = less volatile than market
only use when R-squared is less than 0.7
Coefficient of Variation - AnswersSD / Average Return
useful in determining which investment has more risk.
tells us the probability of actually experiencing a return close to the average return
Four basis premises of Traditional Finance - Answers- markets are efficient
- investors are rational
- the mean-variance portfolio theory governs
- returns are determined by risk
Four basic premises of Behavioral Finance - Answers- markets are inefficient
- investors are irrational
- the Behavioral Portfolio Theory governs
- risk alone does not determine returns
