CFC Cheat Sheet 2026

The 30 highest-yield CFC facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. In a 'bucket strategy,' the short-term bucket typically holds assets designed to cover: → 1–3 years of living expenses in cash or short-term bonds
2. In property insurance, 'replacement cost value' (RCV) coverage differs from 'actual cash value' (ACV) in that RCV: → Pays the cost to replace property with new equivalent without depreciation deduction
3. Which financial metric best measures management's efficiency at generating profit from total assets regardless of capital structure? → Return on assets (ROA)
4. Which portfolio construction approach assigns weights to asset classes based on their market capitalizations? → Market-cap-weighted (passive) allocation
5. Which Medicare supplement (Medigap) plan is the most comprehensive, covering nearly all cost-sharing gaps in original Medicare? → Plan F (for those eligible before 2020)
6. A CFC advises a business owner on a Section 1031 exchange. This provision allows deferral of capital gains tax when: → Exchanging like-kind real property for other qualifying real property
7. EBITDA is commonly used as a proxy for operating cash flow. What does it add back to net income? → Interest, taxes, depreciation, and amortization
8. The debt-to-equity ratio of 2.5 indicates that for every dollar of equity, the company carries: → $2.50 of debt
9. Which document allows an individual to specify their wishes regarding medical treatment if they become incapacitated? → Living will
10. Which annuity type guarantees a fixed income payment for life regardless of how long the annuitant lives? → Life-only (straight life) annuity
11. A CFC recommends a bond with a duration of 8 years when interest rates are expected to rise 1%. Approximately how much will the bond's price change? → -8%
12. Which of the following is considered a 'secured' form of debt? → Auto loan
13. A company's price-to-book (P/B) ratio of 0.8 suggests the market values the company at: → 80% of its stated net asset value
14. Under FINRA rules, a registered representative must disclose outside business activities (OBAs) to their member firm because: → The firm has supervisory responsibility and must assess conflicts with client interests
15. A business owner wants to reward key employees with equity-like incentives without diluting ownership. Which tool best accomplishes this? → Phantom stock plan
16. Which measure captures the economic profit of a business after subtracting the full cost of capital from net operating profit? → Economic Value Added (EVA)
17. An 'umbrella' liability insurance policy primarily provides: → Excess liability coverage above underlying home and auto policy limits
18. The practice of 'selling away' — transacting securities business outside the broker-dealer without firm approval — violates: → FINRA Rule 3280 and the representative's employment agreement
19. Which ratio measures how quickly a business collects its accounts receivable? → Accounts receivable turnover ratio
20. Which investment metric measures the percentage of a portfolio's return attributable to the manager's active decisions rather than market movements? → Alpha
21. Which Social Security strategy for married couples often maximizes lifetime household benefits? → Higher earner delays to age 70; lower earner claims earlier
22. How can life insurance be used in estate planning? → To provide liquidity to pay estate taxes and other expenses
23. A CFC who discovers a material fact about a client's financial situation that the client did not disclose must: → Address it with the client and consider how it affects the advice
24. Which debt repayment strategy focuses on paying off the smallest balance first to build psychological momentum? → Snowball method
25. Which business succession strategy allows a departing owner to receive installment payments over time while the business transfers to a buyer? → Installment sale
26. Which asset allocation strategy automatically rebalances by selling outperforming assets and buying underperforming ones? → Constant-mix strategy
27. Confidentiality obligations in financial planning mean the practitioner must: → Protect client information and only disclose it with client consent or as required by law
28. Under the Fair Debt Collection Practices Act (FDCPA), a debt collector is prohibited from doing which of the following? → Calling a debtor before 8 a.m. or after 9 p.m. without consent
29. What is the significance of capital gains in tax planning? → They are subject to different tax rates depending on the holding period
30. Which investment vehicle allows a CFC client to gain diversified exposure to real estate without directly owning property? → Real Estate Investment Trust (REIT)