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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
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Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.

1. Opportunities in Financial Planning
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
1 - the payout ratio
Price/Earnings per share

2. Net Investment Income
current assets - current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Dollars of coupon interest per year/Bond's current market price
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)

3. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
1 - the payout ratio
[(1+ NR) / (1 + CCL)] - 1
Price Earnings Growth ratio; P/E divided by projected earnings growth

4. Working Capital
Net Income/Equity
Price/Earnings per share
current assets - current liabilities
Total Long-term Debt / Equity

5. Types of Understanding Responses Associated With Active Listening
Sales / Average Total Assets
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Income/Equity

6. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Sales / Average Total Assets
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
[(1+ NR) / (1 + CCL)] - 1
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

7. Assets to Equity ratio
Total Assets / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
driving - expressive - amiable - analytical
current assets - current liabilities

8. Equivalent Tax Deduction
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Free Yield/(1 - Tax Bracket)
Tax Credit/marginal tax rate
[(1+ NR) / (1 + CCL)] - 1

9. Holding Period Return
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(P1 + D - P0)/P0
Net Income/Equity
(current assets - inventory) / current liabilities

10. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Worth/Total Assets
Tax Credit/marginal tax rate
g = ROE X b - where b is equal to the retention ratio

11. Types of Leading Responses
Earnings After Taxes
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
Sources of Funds-Use of Funds or Money in- Money out

12. Sustainable Growth Rate
Tax Free Yield/(1 - Tax Bracket)
Earnings Before Interest & Taxes
driving - expressive - amiable - analytical
g = ROE X b - where b is equal to the retention ratio

13. Major CFP Planning Areas
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Earnings Before Interest & Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

14. Savings Ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Assets / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

15. Equivalent Tax Credit
Earnings After Taxes
Total Liabilities / Equity
Dollars of coupon interest per year/Bond's current market price
Tax Deduction * marginal tax rate

16. The retention ratio
[(1+ NR) / (1 + CCL)] - 1
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
1 - the payout ratio
Earnings After Taxes

17. Gross Investment income
g = ROE X b - where b is equal to the retention ratio
[(1+ NR) / (1 + CCL)] - 1
driving - expressive - amiable - analytical
taxable interest - non-qual. divs - short-term cap. gains

18. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
(current assets - inventory) / current liabilities
EBIT/I (Where I = Interest Expense)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

19. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity
Price/Earnings per share

20. EBIT
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Worth/Total Assets
Earnings Before Interest & Taxes
(P1 + D - P0)/P0

21. Domains of a CFP
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sources of Funds-Use of Funds or Money in- Money out
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

22. Net Cash Flow
g = ROE X b - where b is equal to the retention ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Sources of Funds-Use of Funds or Money in- Money out
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

23. PEG ratio
current assets / current liabilities
Earnings After Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

24. 'normal' ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price/Earnings per share
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / Equity

25. Current Yield of a bond
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
taxable interest - non-qual. divs - short-term cap. gains
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Dollars of coupon interest per year/Bond's current market price

26. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Net Worth/Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

27. Solvency Ratio
current assets / current liabilities
Net Worth/Total Assets
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

28. After-tax Yield
EBIT/I (Where I = Interest Expense)
Total Liabilities / Equity
Tax Free Yield/(1 - Tax Bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

29. P/E ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company
1 - the payout ratio

30. Net After Tax Profit Margin
(Mortgage+Debt Repayment)/Net Income
Total Return (1 - tax bracket)
EAT / Sales
Tax Free Yield/(1 - Tax Bracket)

31. Current Ratio
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Long-term Debt / Equity
current assets / current liabilities

32. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
taxable interest - non-qual. divs - short-term cap. gains
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

33. The payout ratio
Total Assets / Equity
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Earnings Before Interest & Taxes
dividends / earnings

34. ROE (Return On Equity)
RIVETC - Rising median age - Increased impact of dual-income families - Volatility of financial conditions - Evolving tax environment - Technological change - Concern over fraud and firm failure
Net Income/Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)

35. Times Interest Earned
Earnings Before Interest & Taxes
Tax Credit/marginal tax rate
EBIT/I (Where I = Interest Expense)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

36. Asset Turnover Ratio
Total Assets / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)
Sales / Average Total Assets

37. Cash Ratio
(cash + marketable securities) / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

38. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Long-term Debt / Equity

39. Social Styles
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
driving - expressive - amiable - analytical
Sales / Average Total Assets

40. Total Debt to Equity ratio
Net Income/Equity
Total Assets / Equity
Total Liabilities / Equity
Tax Deduction * marginal tax rate

41. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(1/T)(r1+r2+...+rT)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)

42. Present value of a Bond
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Credit/marginal tax rate
Total Return (1 - tax bracket)

43. aka Net Income
dividends / earnings
P*(1+g)/(k-g) P=div per share divided by other div
Earnings After Taxes
assets less liabilities - divided by the number of shares of common stock of a company

44. After-tax Return
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
Price/Earnings per share
(Mortgage+Debt Repayment)/Net Income

45. financial life cycle
(P1 + D - P0)/P0
early career (age 25 or younger to age 35) - career development (age 35 to age 50) - peak accumulation (age 50 to ages 58-62) - preretirement (3 to 6 years prior to planned retirement) - retirement (ages 62-66 and older)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

46. Debt to Equity ratio
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
taxable interest - non-qual. divs - short-term cap. gains
Total Long-term Debt / Equity
EAT / Sales

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CFP: Certified Financial Planner

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