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Duty to Follow Instructions means honoring client decisions once informed advice is provided, unless illegal or unethical. Loyalty (A) is prioritizing client interests. Care (B) is diligence. Fiduciary duty (D) is broader.

Representativeness bias is assuming recent trends will persist indefinitely, leading to extrapolation. Anchoring (B) involves fixation on reference points. Herding (C) is following the crowd. Status quo (D) involves reluctance to change.

Availability bias occurs when vivid or frequent information (media reports) influences decisions disproportionately. Recency (B) emphasizes recent outcomes. Anchoring (C) is fixation on past values. Overconfidence (D) is unrelated here.

Standard deviation measures total variability of returns, including both market-wide (systematic) and firm-specific (unsystematic) risks. Beta isolates systematic risk. Alpha measures excess return. Sharpe ratio adjusts return per unit of risk. CFP candidates must differentiate between these metrics.

Tax planning integrates timing of income and deductions, marginal rate management, and multiyear projections. A Roth conversion accelerates recognition of ordinary income now in exchange for future tax-free qualified withdrawals and no required minimum distributions for the owner. The conversion is most attractive when the taxpayer’s current marginal rate is lower than the expected rate in retirement, or when there are “brackets to fill” (e.g., temporarily depressed income). Option A directly supports converting now. Option B—anticipating a decline—would generally favor waiting; conversely, after a decline, converting at a lower account value can reduce the tax cost. Option C weakens the case since paying the tax from IRA assets diminishes the tax-advantaged base and could trigger penalties if under age thresholds. Option D could favor deferring income (conversion) until the same year as the large deduction to offset it; doing it the year prior loses that coordination. The CFP curriculum stresses modeling multiple years, cash-flow impacts, and behavioral considerations, but fundamentally the rate arbitrage between current and future tax brackets is the central driver for conversion timing.