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CFP: Certified Financial Planner

Subjects : certifications, cfp, business-skills

Instructions:

Answer 46 questions in 15 minutes.
If you are not ready to take this test, you can study here.
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. Holding Period Return
Tax Deduction * marginal tax rate
[(1+ NR) / (1 + CCL)] - 1
(P1 + D - P0)/P0
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

2. EBIT
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Earnings Before Interest & Taxes
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

3. Equivalent Tax Deduction
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Credit/marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(cash + marketable securities) / current liabilities

4. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Deduction * marginal tax rate
Net Worth/Total Assets

5. Solvency Ratio
Net Income/Equity
Net Worth/Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

6. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
Total Liabilities / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Explanatory - Interpretive - Reassuring - Suggestive

7. CFP Ethical principles
Net Worth/Total Assets
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)
Explanatory - Interpretive - Reassuring - Suggestive

8. Cash Ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(current assets - inventory) / current liabilities
(cash + marketable securities) / current liabilities
current assets - current liabilities

9. Book Value (of company stock)
Tax Free Yield/(1 - Tax Bracket)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
assets less liabilities - divided by the number of shares of common stock of a company
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

10. financial life cycle
(cash + marketable securities) / current liabilities
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)
P*(1+g)/(k-g) P=div per share divided by other div

11. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Earnings After Taxes
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)
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

12. Debt to Equity ratio
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
Total Long-term Debt / Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

13. Domains of a CFP
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Tax Deduction * marginal tax rate
Price/Earnings per share
EBIT/I (Where I = Interest Expense)

14. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Deduction * marginal tax rate
Price Earnings Growth ratio; P/E divided by projected earnings growth

15. Types of Leading Responses
Sales / Average Total Assets
Earnings Before Interest & Taxes
Explanatory - Interpretive - Reassuring - Suggestive
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

16. Quick Ratio (aka Acid test)
[(1+ NR) / (1 + CCL)] - 1
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
(current assets - inventory) / current liabilities

17. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Sources of Funds-Use of Funds or Money in- Money out
Price Earnings Growth ratio; P/E divided by projected earnings growth
(1/T)(r1+r2+...+rT)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

18. The retention 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)
1 - the payout ratio
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div

19. Asset Turnover Ratio
Sources of Funds-Use of Funds or Money in- Money out
Tax Credit/marginal tax rate
(cash + marketable securities) / current liabilities
Sales / Average Total Assets

20. Attributes of Effective Advisor communiations
(P1 + D - P0)/P0
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Liabilities / Equity
Earnings Before Interest & Taxes

21. Savings Ratio
Dollars of coupon interest per year/Bond's current market price
Earnings Before Interest & Taxes
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Explanatory - Interpretive - Reassuring - Suggestive

22. Major CFP Planning Areas
Total Liabilities / Equity
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Total Return (1 - tax bracket)

23. aka Net Income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Worth/Total Assets
Earnings After Taxes
Explanatory - Interpretive - Reassuring - Suggestive

24. Current Yield of a bond

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25. ROE (Return On Equity)
Tax Credit/marginal tax rate
current assets - current liabilities
Total Assets / Equity
Net Income/Equity

26. Current Ratio
Sales / Average Total Assets
(P1 + D - P0)/P0
current assets / current liabilities
assets less liabilities - divided by the number of shares of common stock of a company

27. Net Cash Flow
current assets / current liabilities
Sources of Funds-Use of Funds or Money in- Money out
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
(cash + marketable securities) / current liabilities

28. PEG ratio
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
taxable interest - non-qual. divs - short-term cap. gains
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)

29. After-tax Return
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EBIT/I (Where I = Interest Expense)
g = ROE X b - where b is equal to the retention ratio
Total Return (1 - tax bracket)

30. 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
Price Earnings Growth ratio; P/E divided by projected earnings growth
EBIT/I (Where I = Interest Expense)
(current assets - inventory) / current liabilities

31. Net After Tax Profit Margin
(current assets - inventory) / current liabilities
driving - expressive - amiable - analytical
EAT / Sales
Dollars of coupon interest per year/Bond's current market price

32. Liquidity Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Assets / Equity
(Mortgage+Debt Repayment)/Net Income

33. Total Debt to Equity ratio
current assets / current liabilities
Total Long-term Debt / Equity
Total Liabilities / Equity
dividends / earnings

34. Working Capital
current assets - current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
P*(1+g)/(k-g) P=div per share divided by other div
(Mortgage+Debt Repayment)/Net Income

35. financial planning pyramid
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 Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
EAT / Sales

36. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Worth/Total Assets
Total Assets / Equity
EAT / Sales

37. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
(1/T)(r1+r2+...+rT)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

38. After-tax Yield
P*(1+g)/(k-g) P=div per share divided by other div
Total Return (1 - tax bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Free Yield/(1 - Tax Bracket)

39. Net Investment Income
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(1/T)(r1+r2+...+rT)

40. The payout ratio
dividends / earnings
(current assets - inventory) / current liabilities
Total Long-term Debt / Equity
Explanatory - Interpretive - Reassuring - Suggestive

41. Assets to Equity ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
Total Assets / Equity
Earnings After Taxes

42. Social Styles
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sources of Funds-Use of Funds or Money in- Money out
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

43. Times Interest Earned
current assets / current liabilities
EBIT/I (Where I = Interest Expense)
Tax Deduction * marginal tax rate
Total Liabilities / Equity

44. Sustainable Growth Rate
g = ROE X b - where b is equal to the retention ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

45. P/E ratio
taxable interest - non-qual. divs - short-term cap. gains
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(current assets - inventory) / current liabilities
Price/Earnings per share

46. Gross Investment income
taxable interest - non-qual. divs - short-term cap. gains
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sales / Average Total Assets
Total Long-term Debt / Equity