Foundations of Investments

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Identify roadblocks to engaging in investment planning, such as: 
    • Lack of knowledge
    • Cost (perceived or actual)
    • Personal attitudes / choices
  • Explain objectives of an investment plan, such as:
    • Minimize risk
    • Maximize return
    • Determine risk tolerance
    • Develop appropriate asset allocation
    • Determine appropriate investment choices
  • Determine the factors that may affect an individual’s investment plan, such as:
    • Time horizon
    • Risk tolerance
    • Investment objective
    • Liquidity needs
    • Types of income required
    • Stability of income required
    • Marginal tax rates 
    • Family circumstances
    • Business interests 
    • Integration with other objectives
    • Tax attributes of the individual / entity
    • Personal goals / needs / attitudes
  • Determine how each of these factors may impact the suitability of an investment: 
    • Time horizon 
    • Volatility
    • Risk tolerance
    • Investment objective 
    • Financial situation 
    • Personal situation 
    • Income
    • Liquidity 
    • Control 
    • Tax impact
    • Investment management process
    • Economic cycle
    • Cost
    • Historical performance 
    • Performance expectations
  • Evaluate how each of the factors may impact the suitability of an investment.

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Identify roadblocks to engaging in investment planning, such as: 
    • Lack of knowledge
    • Cost (perceived or actual)
    • Personal attitudes / choices
  • Explain objectives of an investment plan, such as:
    • Minimize risk
    • Maximize return
    • Determine risk tolerance
    • Develop appropriate asset allocation
    • Determine appropriate investment choices
  • Determine the factors that may affect an individual’s investment plan, such as:
    • Time horizon
    • Risk tolerance
    • Investment objective
    • Liquidity needs
    • Types of income required
    • Stability of income required
    • Marginal tax rates 
    • Family circumstances
    • Business interests 
    • Integration with other objectives
    • Tax attributes of the individual / entity
    • Personal goals / needs / attitudes
  • Determine how each of these factors may impact the suitability of an investment: 
    • Time horizon 
    • Volatility
    • Risk tolerance
    • Investment objective 
    • Financial situation 
    • Personal situation 
    • Income
    • Liquidity 
    • Control 
    • Tax impact
    • Investment management process
    • Economic cycle
    • Cost
    • Historical performance 
    • Performance expectations
  • Evaluate how each of the factors may impact the suitability of an investment.