Practicing multiple-choice questions for the CFP® exam not only enhances your knowledge retention and critical thinking skills but also helps you understand the subjects. Recently introduced subjects in the CFP® exam like “psychology of financial planning” requires a deep understanding of the psychological factors that influence clients. Developing a strong understanding of behavioral finance principles and how they impact clients’ financial decision-making processes can help you prepare for “psychology of financial planning” in a better way. By engaging with the practice tests regularly, you gain a deeper understanding of how psychological factors influence financial decisions and planning strategies.
It even allows you to analyze complex scenarios, apply theoretical concepts to real-world situations, and make informed choices. By exploring the psychology of financial planning curriculum, you develop a comprehensive skill set to excel in the CFP® exam, incorporating both technical expertise and a nuanced understanding of human behavior.
Deepen your understanding by solving these ten sample questions on the psychology of financial planning subject provided by CFP® Exam Prep by Achieve to answer them accurately in no time.
Q 1. Which of the following factors might explain why investors are hesitant to sell a stock that is underperforming?
A. Confirmation bias
B. Behavioral confirmation effect
C. Representative bias
D. Self-fulfilling prophecy
Q 2. What is Black Swan Event in terms of Finance?
A. Negative & unexpected event
B. Positive & expected event
C. Negative & expected event
D. Positive & unexpected event
Q 3. During black swan event, Mary faced huge losses in it investment portfolio. As per American Counseling Association, which protocol should not be followed in the following by the CFP® professional?
A. Identify major problem
B. Explore alternatives
C. Take decision rapidly
D. Develop action plan
Q 4. What is NOT considered an effective interpersonal skill?
A. Passive Listening
B. Strategic Body Language
C. Following Standard English
D. Observing professional etiquette
Q 5. What characteristics would an employee with strong interpersonal skills exhibit?
D. All of the above
Q 6. When Matt started at his current job, his company did not automatically enroll him in a retirement savings plan and he still has not enrolled. When Suzanne started her, she was enrolled in an automatic savings plan and has stayed in the plan. Matt and Suzanne’s behavior is probably driven by
A. Hyperbolic discounting
B. Limited self-control
C. Status quo bias
D. Loss aversion
Q 7. When Mike started with his firm ten years ago, he opened a retirement savings plan and allocated 70% of the contributions to a stock fund and 30% to a bond fund, since then, his allocations have not changed. What is the problem with this?
A. He should really be putting more money in stocks to ensure a well-funded retirement
B. If he really wanted to keep the same risk exposure he would need to rebalance as the value of his savings change over time
C. He should be increasing the allocation to stocks as he gets older
D. There is no problem with Mike’s choice, and he could suffer if he reevaluated his portfolio too frequently
Q 8. Which of the following is not a source of money conflict in marriage?
A. Not Being Transparent About Your Finances
B. Different Risk Tolerances
C. Saving for the future
D. Out-of-Sync Retirement
Q 9. What are the basic assumption CFP member should keep in mind while working effectively and positively through money arguments?
A. Expect money arguments
B. Conflict as opportunity
C. Balance power
D. All of the above
Q 10. In developing a financial plan for clients nearing retirement a CFP® Certificant needs to consider all the following assumptions except:
A. Required risk
B. Risk tolerance
C. Overconfidence bias
D. Mental accounting
By practicing CFP® exam questions under time constraints, you can enhance your ability to respond promptly to problems. Engaging with practice questions every day from CFP® Exam Prep by Achieve App helps you to get familiar with various types of problems you may encounter during the exam. This aids to build the ability to solve complex MCQs with ease and confidence. Remember to allocate sufficient time for study and revision, create a study schedule, and maintain consistency in your preparation efforts.