I Will Know These

Question 1

PITI

Question 2

Nouns used with CFP

Answer 2

Certificant 
Practitioner
Professional
Certification
Mark
Exam
Registrant*
(Not currently certified but certified by CFP Board in the past and generally entitled to use the CFP marks

Question 3

Investing by age for kids education

Answer 3

<13y = Equities
14-17y = Fixed Income
17y+ = Cash

Question 4

SEC

Answer 4

• Regulates disclosure requirements (ADV)

Question 5

Series 6

Answer 5

Mutual Funds
UITs
New Issue Variables
Open Ended Funds, 529s

Question 6

Series 7

Answer 6

General securities
2ndary UITs
Closed End MF

Question 7

Series 63

Answer 7

Blue Sky

Uniform Securities Agent State Law Exam

Question 8

Series 65

Answer 8

Uniform Investment Advisor Exam

Question 9

Series 66

Answer 9

Combines 63 & 66

Uniform Combined state paw exam

Question 10

CFP Revocation

Answer 10

PERMANENT!

Question 11

*Behavioral Finance*
Life change
Job change
Divorce
Move

Answer 11

Gather new data
Reevaluate
Reestablish the scope of the relationship

Question 12

CFP Suspension

Answer 12

30 days to appeal suspension
Automatically Published
CFP practitioner must notify their clients

Question 13

Heuristics

Answer 13

A strategy that ignores part of the information.

• Trial and error
• Rule of thumb
• Educated guess.

Question 14

Anchoring

Answer 14

Becoming attached to a specific price as the fair value of a holding

Handling it:
Force yourself to evaluate an investment only as if you were making the purchase no.

Question 15

Attachment Bias

Answer 15

My grandfather left me this stock so I can never sell it

Question 16

Endowment Bias*

Answer 16

Feeling that because you own the asset, it is more valuable and special since it is yours.
“Inherited a family summer home and wouldn’t ever sell it even though it is a money pit”

Question 17

Cognitive Dissonance

Answer 17

Remembering the positive part of an experience but forgetting the negative

• Domestic Abuse *

Question 18

Confirmation Bias

Answer 18

Tendency to accept any info that confirms preconceived position or opinion

Question 19

Diversification Errors

Answer 19

Tend to diversify evenly across whatever options are available

Question 20

Fear of Regret

Answer 20

Tendency to take no action rather than risk making the wrong one

Question 21

Gambler’s Fallacy

Answer 21

Onset of certain random event is likely to happen following an event or series of events
“Liquidate a position after it goes up. It is likely to DROP”

Question 22

Herd Behavior

Answer 22

FOMO

• Tech Bubble
• Crypto

Question 23

Hindsight Bias

Answer 23

Looking at a past event and thinking we understand it, when in reality we may not.

People now claim they saw signs of the tech bubble of the 90s = creating over confidence

Question 24

Inappropriate Extrapolation

Answer 24

Tendency to look at recent events and assume that those conditions will continue indefinitely

Question 25

Analysis Paralysis

Answer 25

Hold that a superior solution is a short step away, and sill in its endless pursuit with no concept of diminishing returns.

Question 26

Mental Accounting

Answer 26

Looking at sums of money differently, depending on their source or the intended use

Question 27

Outcome Bias

Answer 27

Investor wants to double his money in an investment without doing adequate research

Question 28

Self-Affirmation Bias

Answer 28

Belief that when something goes right, it is because you were smart and made the right decision. If it does not work out, it is someone else's fault, or simply bad luck.

Question 29

Risk Capacity v Risk Tolerance

Answer 29

Capacity - NEED TO TAKE | Tolerance - WANT TO TAKE

Question 30

CFP Unable to attain the information needed

Answer 30

1. Terminate the relationship | 2. Limit the scope to those able to provide

Question 31

College Tuition Retirement Benef Received Family Needs Begin or End Mode

Answer 31

Begin Mode

Question 32

401k deferrals Profit-sharing Contributions Bond interest paid Mortgage Payments Begin or End Mode

Answer 32

End Mode

Question 33

Deduction v Credit Calculations

Answer 33

(Deduction)(tax bracket) = equiv Credit Tax Credit / tax bracket = equiv Deduct