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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. Solvency Ratio
Net Worth/Total Assets
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
P*(1+g)/(k-g) P=div per share divided by other div
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

2. Net Investment Income
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Tax Credit/marginal tax rate
dividends / earnings
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

3. Debt to Equity ratio
Explanatory - Interpretive - Reassuring - Suggestive
Net Income/Equity
Total Long-term Debt / Equity
assets less liabilities - divided by the number of shares of common stock of a company

4. Social Styles
Sales / Average Total Assets
driving - expressive - amiable - analytical
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

5. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
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/T)(r1+r2+...+rT)
Sales / Average Total Assets

6. Present value of a Bond
Tax Free Yield/(1 - Tax Bracket)
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
[(1+ NR) / (1 + CCL)] - 1

7. financial life cycle
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)
g = ROE X b - where b is equal to the retention ratio
EAT / Sales
dividends / earnings

8. Sustainable Growth Rate
dividends / earnings
g = ROE X b - where b is equal to the retention ratio
Total Assets / Equity
EBIT/I (Where I = Interest Expense)

9. CFP Ethical principles
Tax Credit/marginal tax rate
Price/Earnings per share
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets

10. After-tax Yield
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Sales / Average Total Assets
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

11. ROE (Return On Equity)
P*(1+g)/(k-g) P=div per share divided by other div
Net Income/Equity
driving - expressive - amiable - analytical
Earnings Before Interest & Taxes

12. Savings Ratio
taxable interest - non-qual. divs - short-term cap. gains
Net Worth/Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sources of Funds-Use of Funds or Money in- Money out

13. Net Cash Flow
(P1 + D - P0)/P0
current assets - current liabilities
Sources of Funds-Use of Funds or Money in- Money out
Total Return (1 - tax bracket)

14. Assets to Equity ratio
Tax Deduction * marginal tax rate
Total Assets / Equity
Price/Earnings per share
g = ROE X b - where b is equal to the retention ratio

15. Attributes of Effective Advisor communiations
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Return (1 - tax bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Price/Earnings per share

16. Types of Understanding Responses Associated With Active Listening
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
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Long-term Debt / Equity

17. Times Interest Earned
EBIT/I (Where I = Interest Expense)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

18. financial planning pyramid
[(1+ NR) / (1 + CCL)] - 1
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

19. Major CFP Planning Areas
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

20. The payout ratio
Earnings Before Interest & Taxes
Price Earnings Growth ratio; P/E divided by projected earnings growth
dividends / earnings
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

21. Current Ratio
Explanatory - Interpretive - Reassuring - Suggestive
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
current assets / current liabilities
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

22. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
current assets / current liabilities
P*(1+g)/(k-g) P=div per share divided by other div
Total Liabilities / Equity

23. Equivalent Tax Deduction
Tax Free Yield/(1 - Tax Bracket)
(current assets - inventory) / current liabilities
Tax Credit/marginal tax rate
P*(1+g)/(k-g) P=div per share divided by other div

24. Net After Tax Profit Margin
Tax Free Yield/(1 - Tax Bracket)
EAT / Sales
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)

25. Opportunities in Financial Planning
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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
Dollars of coupon interest per year/Bond's current market price

26. The retention ratio
EAT / Sales
(P1 + D - P0)/P0
Tax Deduction * marginal tax rate
1 - the payout ratio

27. Cash Ratio
(cash + marketable securities) / current liabilities
Total Return (1 - tax bracket)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
(Mortgage+Debt Repayment)/Net Income

28. 'normal' ratio
dividends / earnings
P*(1+g)/(k-g) P=div per share divided by other div
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

29. Types of Leading Responses
Explanatory - Interpretive - Reassuring - Suggestive
Sales / Average Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Total Long-term Debt / Equity

30. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
driving - expressive - amiable - analytical
(cash + marketable securities) / current liabilities
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

31. aka Net Income
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1

32. Equivalent Tax Credit
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Dollars of coupon interest per year/Bond's current market price
Tax Deduction * marginal tax rate
Earnings After Taxes

33. P/E ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

34. EBIT
EAT / Sales
Earnings Before Interest & Taxes
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
P*(1+g)/(k-g) P=div per share divided by other div

35. After-tax Return
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Return (1 - tax bracket)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Free Yield/(1 - Tax Bracket)

36. Holding Period Return
Total Return (1 - tax bracket)
(1/T)(r1+r2+...+rT)
(P1 + D - P0)/P0
(Mortgage+Debt Repayment)/Net Income

37. Current Yield of a bond
Dollars of coupon interest per year/Bond's current market price
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Assets / Equity

38. Domains of a CFP
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
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
EAT / Sales
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

39. Liquidity Ratio
Total Return (1 - tax bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
taxable interest - non-qual. divs - short-term cap. gains
Total Long-term Debt / Equity

40. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
Net Income/Equity
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

41. Total Debt to Equity ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EBIT/I (Where I = Interest Expense)
Total Return (1 - tax bracket)
Total Liabilities / Equity

42. Quick Ratio (aka Acid test)
Earnings Before Interest & Taxes
Net Worth/Total Assets
g = ROE X b - where b is equal to the retention ratio
(current assets - inventory) / current liabilities

43. Asset Turnover Ratio
Total Return (1 - tax bracket)
Sales / Average Total Assets
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Explanatory - Interpretive - Reassuring - Suggestive

44. Gross Investment income
Earnings Before Interest & Taxes
Earnings After Taxes
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
taxable interest - non-qual. divs - short-term cap. gains

45. Working Capital
(P1 + D - P0)/P0
Tax Credit/marginal tax rate
Tax Deduction * marginal tax rate
current assets - current liabilities

46. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(P1 + D - P0)/P0
Sales / Average Total Assets

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CFP: Certified Financial Planner

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