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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. Equivalent Tax Deduction
Sales / Average Total Assets
Tax Credit/marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

2. Equivalent Tax Credit
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)
P*(1+g)/(k-g) P=div per share divided by other div
Dollars of coupon interest per year/Bond's current market price
Tax Deduction * marginal tax rate

3. Current Yield of a bond
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(cash + marketable securities) / current liabilities
Dollars of coupon interest per year/Bond's current market price

4. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Explanatory - Interpretive - Reassuring - Suggestive
(1/T)(r1+r2+...+rT)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings After Taxes

5. EBIT
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(current assets - inventory) / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
Earnings Before Interest & Taxes

6. Debt to Equity ratio
Total Long-term Debt / Equity
current assets / current liabilities
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities

7. financial life cycle
(cash + marketable securities) / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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)
(P1 + D - P0)/P0

8. aka Net Income
(cash + marketable securities) / current liabilities
Earnings After Taxes
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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

9. Net Investment Income
Tax Free Yield/(1 - Tax Bracket)
dividends / earnings
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
g = ROE X b - where b is equal to the retention ratio

10. Opportunities in Financial Planning
current assets / current liabilities
Price/Earnings per share
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

11. Assets to Equity ratio
Total Assets / Equity
(cash + marketable securities) / current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(Mortgage+Debt Repayment)/Net Income

12. Types of Understanding Responses Associated With Active Listening
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EBIT/I (Where I = Interest Expense)

13. Working Capital
current assets - current liabilities
Price/Earnings per share
Total Assets / Equity
Sources of Funds-Use of Funds or Money in- Money out

14. ROE (Return On Equity)
Net Income/Equity
Explanatory - Interpretive - Reassuring - Suggestive
Total Assets / Equity
Sources of Funds-Use of Funds or Money in- Money out

15. Current Ratio
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
(P1 + D - P0)/P0
current assets / current liabilities
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

16. Holding Period Return
EAT / Sales
P*(1+g)/(k-g) P=div per share divided by other div
Tax Free Yield/(1 - Tax Bracket)
(P1 + D - P0)/P0

17. P/E ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price/Earnings per share
Total Assets / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

18. After-tax Return
Total Return (1 - tax bracket)
taxable interest - non-qual. divs - short-term cap. gains
assets less liabilities - divided by the number of shares of common stock of a company
Explanatory - Interpretive - Reassuring - Suggestive

19. Total Debt to Equity ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Liabilities / Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Dollars of coupon interest per year/Bond's current market price

20. Types of Leading Responses
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Worth/Total Assets
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive

21. After-tax Yield
[(1+ NR) / (1 + CCL)] - 1
Tax Free Yield/(1 - Tax Bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
assets less liabilities - divided by the number of shares of common stock of a company

22. Liquidity Ratio
1 - the payout ratio
Earnings Before Interest & Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

23. Asset Turnover Ratio
Sales / Average Total Assets
Dollars of coupon interest per year/Bond's current market price
driving - expressive - amiable - analytical
(Mortgage+Debt Repayment)/Net Income

24. PEG ratio
current assets / current liabilities
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth
(cash + marketable securities) / current liabilities

25. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
current assets - current liabilities
(P1 + D - P0)/P0

26. 'normal' ratio
Total Return (1 - tax bracket)
(1/T)(r1+r2+...+rT)
P*(1+g)/(k-g) P=div per share divided by other div
Total Long-term Debt / Equity

27. Domains of a CFP
current assets - current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Explanatory - Interpretive - Reassuring - Suggestive
1 - the payout ratio

28. financial planning pyramid
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
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)
Price Earnings Growth ratio; P/E divided by projected earnings growth

29. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
(current assets - inventory) / current liabilities
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company

30. Attributes of Effective Advisor communiations
Tax Deduction * marginal tax rate
Sales / Average Total Assets
[(1+ NR) / (1 + CCL)] - 1
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

31. Solvency Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Price/Earnings per share
Total Return (1 - tax bracket)
Net Worth/Total Assets

32. The payout ratio
Total Long-term Debt / Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
assets less liabilities - divided by the number of shares of common stock of a company
dividends / earnings

33. Savings Ratio
P*(1+g)/(k-g) P=div per share divided by other div
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Net Worth/Total Assets

34. Present value of a Bond
current assets / current liabilities
(cash + marketable securities) / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

35. Social Styles
driving - expressive - amiable - analytical
Total Liabilities / Equity
Total Return (1 - tax bracket)
(Mortgage+Debt Repayment)/Net Income

36. Cash Ratio
g = ROE X b - where b is equal to the retention ratio
(cash + marketable securities) / current liabilities
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes

37. Quick Ratio (aka Acid test)
(cash + marketable securities) / current liabilities
(current assets - inventory) / current liabilities
(Mortgage+Debt Repayment)/Net Income
driving - expressive - amiable - analytical

38. The retention ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
1 - the payout 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)
Total Long-term Debt / Equity

39. Debt Service Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Mortgage+Debt Repayment)/Net Income
current assets / current liabilities
Net Worth/Total Assets

40. Net After Tax Profit Margin
Earnings After Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
EAT / Sales
(1/T)(r1+r2+...+rT)

41. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(P1 + D - P0)/P0
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EBIT/I (Where I = Interest Expense)

42. Gross Investment income
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Long-term Debt / Equity
(current assets - inventory) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains

43. Book Value (of company stock)
Earnings After Taxes
Net Worth/Total Assets
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
assets less liabilities - divided by the number of shares of common stock of a company

44. Net Cash Flow
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Price/Earnings per share
Tax Credit/marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out

45. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
current assets / current liabilities
[(1+ NR) / (1 + CCL)] - 1
Net Worth/Total Assets
Net Income/Equity

46. Times Interest Earned
Price Earnings Growth ratio; P/E divided by projected earnings growth
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
(Mortgage+Debt Repayment)/Net Income
EBIT/I (Where I = Interest Expense)

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CFP: Certified Financial Planner

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