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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
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

2. Times Interest Earned
(P1 + D - P0)/P0
current assets / current liabilities
EBIT/I (Where I = Interest Expense)
Price/Earnings per share

3. Social Styles
driving - expressive - amiable - analytical
current assets - current liabilities
Sales / Average Total Assets
Net Income/Equity

4. Equivalent Tax Credit
Total Long-term Debt / Equity
EBIT/I (Where I = Interest Expense)
Sales / Average Total Assets
Tax Deduction * marginal tax rate

5. Debt Service Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(Mortgage+Debt Repayment)/Net Income
(cash + marketable securities) / current liabilities
(1/T)(r1+r2+...+rT)

6. P/E ratio
Price/Earnings per share
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(current assets - inventory) / current liabilities
current assets / current liabilities

7. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
(current assets - inventory) / current liabilities
[(1+ NR) / (1 + CCL)] - 1
taxable interest - non-qual. divs - short-term cap. gains
driving - expressive - amiable - analytical

8. Sustainable Growth Rate
taxable interest - non-qual. divs - short-term cap. gains
Price/Earnings per share
Price Earnings Growth ratio; P/E divided by projected earnings growth
g = ROE X b - where b is equal to the retention ratio

9. Equivalent Tax Deduction
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate
driving - expressive - amiable - analytical
dividends / earnings

10. Cash Ratio
Tax Free Yield/(1 - Tax Bracket)
1 - the payout ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(cash + marketable securities) / current liabilities

11. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Sources of Funds-Use of Funds or Money in- Money out
(1/T)(r1+r2+...+rT)
[(1+ NR) / (1 + CCL)] - 1
Total Long-term Debt / Equity

12. Domains of a CFP
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(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
Net Income/Equity

13. Types of Understanding Responses Associated With Active Listening
Total Long-term Debt / Equity
dividends / earnings
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
P*(1+g)/(k-g) P=div per share divided by other div

14. 'normal' ratio
Sales / Average Total Assets
Earnings After Taxes
Dollars of coupon interest per year/Bond's current market price
P*(1+g)/(k-g) P=div per share divided by other div

15. ROE (Return On Equity)
Net Income/Equity
Sources of Funds-Use of Funds or Money in- Money out
(current assets - inventory) / current liabilities
Dollars of coupon interest per year/Bond's current market price

16. Current Yield of a bond

17. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Long-term Debt / 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
EAT / Sales

18. PEG ratio
current assets / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

19. Current Ratio
Tax Free Yield/(1 - Tax Bracket)
Earnings After Taxes
current assets / current liabilities
Tax Credit/marginal tax rate

20. Major CFP Planning Areas
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Tax Free Yield/(1 - Tax Bracket)
(Mortgage+Debt Repayment)/Net Income
Sales / Average Total Assets

21. financial life cycle
Net Income/Equity
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)
driving - expressive - amiable - analytical
Tax Free Yield/(1 - Tax Bracket)

22. Asset Turnover Ratio
Tax Credit/marginal tax rate
Sales / Average Total Assets
taxable interest - non-qual. divs - short-term cap. gains
Net Worth/Total Assets

23. After-tax Yield
Tax Deduction * marginal tax rate
Net Income/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
Tax Free Yield/(1 - Tax Bracket)

24. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)
(1/T)(r1+r2+...+rT)
driving - expressive - amiable - analytical

25. Net Cash Flow
1 - the payout ratio
Sources of Funds-Use of Funds or Money in- Money out
EBIT/I (Where I = Interest Expense)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

26. EBIT
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes
Sales / Average Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

27. Quick Ratio (aka Acid test)
Net Income/Equity
Total Liabilities / Equity
(current assets - inventory) / current liabilities
current assets / current liabilities

28. financial planning pyramid
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
assets less liabilities - divided by the number of shares of common stock of a company
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 After Taxes

29. CFP Ethical principles
assets less liabilities - divided by the number of shares of common stock of a company
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div

30. Book Value (of company stock)
Tax Free Yield/(1 - Tax Bracket)
dividends / earnings
assets less liabilities - divided by the number of shares of common stock of a company
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)

31. Total Debt to Equity ratio
Sources of Funds-Use of Funds or Money in- Money out
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(cash + marketable securities) / current liabilities
Total Liabilities / Equity

32. aka Net Income
Sources of Funds-Use of Funds or Money in- Money out
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 After Taxes
assets less liabilities - divided by the number of shares of common stock of a company

33. Savings Ratio
taxable interest - non-qual. divs - short-term cap. gains
driving - expressive - amiable - analytical
Total Liabilities / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

34. After-tax Return
(cash + marketable securities) / current liabilities
EAT / Sales
Total Return (1 - tax bracket)
Price/Earnings per share

35. The payout ratio
dividends / earnings
Explanatory - Interpretive - Reassuring - Suggestive
Price Earnings Growth ratio; P/E divided by projected earnings growth
(Mortgage+Debt Repayment)/Net Income

36. Debt to Equity ratio
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Sales / Average Total Assets
Total Long-term Debt / Equity

37. Net After Tax Profit Margin
Tax Credit/marginal tax rate
Total Assets / Equity
EAT / Sales
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

38. Holding Period Return
[(1+ NR) / (1 + CCL)] - 1
(current assets - inventory) / current liabilities
(P1 + D - P0)/P0
Explanatory - Interpretive - Reassuring - Suggestive

39. Net Investment Income
Tax Deduction * marginal tax rate
(current assets - inventory) / current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

40. The retention ratio
1 - the payout ratio
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Earnings After Taxes
Total Assets / Equity

41. Assets to Equity ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Assets / Equity
[(1+ NR) / (1 + CCL)] - 1
dividends / earnings

42. Types of Leading Responses
(P1 + D - P0)/P0
taxable interest - non-qual. divs - short-term cap. gains
Explanatory - Interpretive - Reassuring - Suggestive
(cash + marketable securities) / current liabilities

43. Working Capital
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Tax Free Yield/(1 - Tax Bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets - current liabilities

44. Solvency Ratio
(cash + marketable securities) / current liabilities
(P1 + D - P0)/P0
assets less liabilities - divided by the number of shares of common stock of a company
Net Worth/Total Assets

45. Gross Investment income
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Assets / Equity
EAT / Sales
taxable interest - non-qual. divs - short-term cap. gains

46. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(current assets - inventory) / current liabilities
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

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