Experience the Quality With Free CFP Exam Questions That Helps Candidates Pass

The wash sale rule disallows losses if the same (or substantially identical) stock is repurchased within 30 days. Step transaction (A) and substance-over-form (D) address other areas. Constructive receipt (C) concerns timing.

Interest coverage = EBIT ÷ interest expense. It reflects ability to service debt. Current ratio (A) measures liquidity, debt-to-equity (C) measures leverage, and savings ratio (D) relates to personal planning. This metric supports risk analysis for highly leveraged clients.

The gambler’s fallacy is believing past random outcomes affect future probability. Representativeness (A) is pattern extrapolation. Overconfidence (C) is excess belief in ability. Herding (D) is group-following. CFP planners recognize these behaviors in client decision-making.

In property insurance, coinsurance requires the insured to maintain coverage at a stated percentage of property value (often 80%). Failure to do so results in reduced claim payments. Coinsurance in health insurance is cost-sharing (A). Deductibles (C) and exclusions (D) are separate provisions.

403(b) plans serve public schools and tax-exempt organizations. 401(k) plans (A) are private sector. SEP (C) and SIMPLE (D) IRAs are small business/self-employed vehicles.