CPS Cheat Sheet 2026

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

1. What is 'dollar-cost averaging' in portfolio management? → Investing fixed amounts at regular intervals regardless of price
2. Why is it important for Certified Portfolio Specialists to keep up-to-date with regulatory changes? → All of the above.
3. What does asset allocation primarily determine in a portfolio? → The overall risk and return profile
4. What is 'concentration risk' in a portfolio? → Risk from having too large a position in a single security or sector
5. Which tool is commonly used to hedge against portfolio downside risk? → Put options on the portfolio or index
6. Which of the following is a typical prerequisite consideration for pursuing the CPS designation? → Experience or coursework in financial services or investment management
7. What is 'rebalancing' in portfolio management? → Restoring a portfolio to its target asset allocation
8. Which metric measures the return per unit of total risk in portfolio analysis? → Sharpe Ratio
9. Which of the following is a reason why Certified Portfolio Specialists should continue to update their knowledge of risk management techniques? → New investment products and strategies introduce unique risks.
10. How does the Certified Portfolio Specialist (CPS) designation enhance a professional's credibility? → By indicating a high level of expertise in portfolio management and investment strategies.
11. Which performance measurement concept is important for CPS exam candidates to understand? → Risk-adjusted return measures like Sharpe Ratio, Treynor Ratio, and Alpha
12. The Sharpe Ratio measures which of the following? → Excess return per unit of total risk (standard deviation)
13. What does 'know your client' (KYC) require of a CPS professional? → Understanding the client's full financial situation, goals, and investment experience
14. Why is continuing education essential for a Certified Portfolio Specialist? → All of the above.
15. How should a CPS professional handle a client who panics during a market downturn? → Acknowledge emotions, provide perspective, and review the long-term investment plan
16. What is 'behavioral finance' relevant to client relationship management? → The study of how psychological biases affect investor decisions and portfolio outcomes
17. What is 'inflation risk' (purchasing power risk) in a portfolio? → The risk that returns will not keep pace with inflation
18. What advantage does a Certified Portfolio Specialist gain by having advanced knowledge in asset allocation and risk management? → They can develop tailored portfolios that better meet client goals and risk tolerance.
19. Which economic indicator would a Certified Portfolio Specialist likely monitor to assess potential impacts on a client’s investment portfolio? → Gross Domestic Product (GDP)
20. Which of the following risk management strategies is primarily focused on reducing unsystematic risk in a portfolio? → Diversification across different asset classes
21. What is a 'fiduciary' standard in portfolio management? → Acting in the client's best interest at all times, above one's own interests
22. What is 'alternative investment' allocation used for in portfolios? → Providing diversification and potential returns uncorrelated with stocks and bonds
23. What is 'liability-driven investing' (LDI)? → Structuring a portfolio to meet specific future liabilities
24. Which risk management technique involves setting a predetermined price to automatically sell a position? → Stop-loss order
25. What is 'anchoring bias' in investment decision-making? → Over-relying on an initial piece of information when making investment decisions
26. What does 'beta' measure in portfolio risk analysis? → A portfolio's sensitivity to market movements
27. In portfolio design, what is the purpose of a policy statement? → To establish investment objectives and constraints
28. What is the purpose of regular portfolio performance reporting to clients? → To keep clients informed, demonstrate value, and maintain trust through transparency
29. When evaluating a portfolio manager's skill in selecting individual securities, which metric is most directly appropriate? → Jensen's Alpha
30. Which statement best describes 'passive' portfolio management? → Tracking a benchmark index with minimal trading