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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. aka Net Income
Earnings After Taxes
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
1 - the payout ratio

2. Quick Ratio (aka Acid test)
driving - expressive - amiable - analytical
Dollars of coupon interest per year/Bond's current market price
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
(current assets - inventory) / current liabilities

3. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Earnings After Taxes
Total Long-term Debt / Equity
dividends / earnings

4. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Dollars of coupon interest per year/Bond's current market price
Total Return (1 - tax bracket)
[(1+ NR) / (1 + CCL)] - 1
Net Income/Equity

5. After-tax Yield
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Dollars of coupon interest per year/Bond's current market price
Tax Free Yield/(1 - Tax Bracket)
Earnings Before Interest & Taxes

6. After-tax Return
EAT / Sales
Sales / Average Total Assets
Total Return (1 - tax bracket)
Tax Free Yield/(1 - Tax Bracket)

7. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
assets less liabilities - divided by the number of shares of common stock of a company
Net Income/Equity
Price/Earnings per share

8. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Sales / Average Total Assets
Total Long-term Debt / Equity

9. Present value of a Bond
Tax Credit/marginal tax rate
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
1 - the payout ratio

10. Equivalent Tax Deduction
Tax Credit/marginal tax rate
Sales / Average Total Assets
Net Income/Equity
current assets - current liabilities

11. Book Value (of company stock)
Tax Credit/marginal tax rate
assets less liabilities - divided by the number of shares of common stock of a company
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate

12. Debt Service Ratio
Total Assets / Equity
(1/T)(r1+r2+...+rT)
(Mortgage+Debt Repayment)/Net Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

13. Domains of a CFP
(Mortgage+Debt Repayment)/Net Income
g = ROE X b - where b is equal to the retention ratio
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

14. Holding Period Return
EAT / Sales
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EBIT/I (Where I = Interest Expense)
(P1 + D - P0)/P0

15. Debt to Equity ratio
current assets / current liabilities
[(1+ NR) / (1 + CCL)] - 1
Total Long-term Debt / Equity
Price/Earnings per share

16. P/E ratio
Price/Earnings per share
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
assets less liabilities - divided by the number of shares of common stock of a company

17. Social Styles
Tax Credit/marginal tax rate
driving - expressive - amiable - analytical
Price/Earnings per share
(P1 + D - P0)/P0

18. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

19. Current Ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
current assets / current liabilities
Net Income/Equity
(Mortgage+Debt Repayment)/Net Income

20. The payout ratio
Earnings Before Interest & Taxes
(P1 + D - P0)/P0
Net Worth/Total Assets
dividends / earnings

21. Sustainable Growth Rate
Net Income/Equity
g = ROE X b - where b is equal to the retention ratio
EBIT/I (Where I = Interest Expense)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

22. Equivalent Tax Credit
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Tax Deduction * marginal tax rate
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(current assets - inventory) / current liabilities

23. ROE (Return On Equity)
Net Income/Equity
(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
Tax Deduction * marginal tax rate

24. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(current assets - inventory) / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(Mortgage+Debt Repayment)/Net Income

25. The retention ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
1 - the payout ratio
(1/T)(r1+r2+...+rT)

26. Times Interest Earned
EBIT/I (Where I = Interest Expense)
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

27. Net Cash Flow
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity
(P1 + D - P0)/P0
Sources of Funds-Use of Funds or Money in- Money out

28. Net After Tax Profit Margin
driving - expressive - amiable - analytical
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Worth/Total Assets
EAT / Sales

29. Net Investment Income
taxable interest - non-qual. divs - short-term cap. gains
EBIT/I (Where I = Interest Expense)
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)

30. Asset Turnover Ratio
Total Long-term Debt / Equity
Sales / Average Total Assets
g = ROE X b - where b is equal to the retention ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

31. Current Yield of a bond

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32. Assets to Equity ratio
P*(1+g)/(k-g) P=div per share divided by other div
Tax Deduction * marginal tax rate
Explanatory - Interpretive - Reassuring - Suggestive
Total Assets / Equity

33. Working Capital
current assets - current liabilities
Total Assets / Equity
Tax Credit/marginal tax rate
EAT / Sales

34. Major CFP Planning Areas
EAT / Sales
Dollars of coupon interest per year/Bond's current market price
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

35. financial life cycle
dividends / earnings
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
P*(1+g)/(k-g) P=div per share divided by other div
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)

36. Opportunities in Financial Planning
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities
Total Liabilities / 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

37. Types of Understanding Responses Associated With Active Listening
Total Liabilities / Equity
(P1 + D - P0)/P0
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
P*(1+g)/(k-g) P=div per share divided by other div

38. Gross Investment income
assets less liabilities - divided by the number of shares of common stock of a company
Total Long-term Debt / Equity
taxable interest - non-qual. divs - short-term cap. gains
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

39. Total Debt to Equity ratio
Total Assets / Equity
(1/T)(r1+r2+...+rT)
Total Liabilities / Equity
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

40. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Tax Credit/marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
dividends / earnings

41. CFP Ethical principles
Price Earnings Growth ratio; P/E divided by projected earnings growth
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(current assets - inventory) / current liabilities
[(1+ NR) / (1 + CCL)] - 1

42. EBIT
(1/T)(r1+r2+...+rT)
Earnings Before Interest & Taxes
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out

43. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Income/Equity
Sources of Funds-Use of Funds or Money in- Money out
(P1 + D - P0)/P0

44. Solvency Ratio
P*(1+g)/(k-g) P=div per share divided by other div
Net Worth/Total Assets
Dollars of coupon interest per year/Bond's current market price
assets less liabilities - divided by the number of shares of common stock of a company

45. Savings Ratio
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

46. Cash Ratio
(cash + marketable securities) / current liabilities
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)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Liabilities / Equity