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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. CFP Ethical principles
1 - the payout ratio
Dollars of coupon interest per year/Bond's current market price
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

2. Asset Turnover Ratio
Sales / Average Total Assets
driving - expressive - amiable - analytical
Total Long-term Debt / Equity
Tax Credit/marginal tax rate

3. Opportunities in Financial Planning
Earnings Before Interest & Taxes
(1/T)(r1+r2+...+rT)
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
Total Assets / Equity

4. EBIT
EBIT/I (Where I = Interest Expense)
(current assets - inventory) / current liabilities
Earnings Before Interest & Taxes
Price/Earnings per share

5. After-tax Yield
Tax Free Yield/(1 - Tax Bracket)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Income/Equity
(1/T)(r1+r2+...+rT)

6. Times Interest Earned
EBIT/I (Where I = Interest Expense)
taxable interest - non-qual. divs - short-term cap. gains
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price/Earnings per share

7. After-tax Return
Sales / Average Total Assets
Earnings Before Interest & Taxes
g = ROE X b - where b is equal to the retention ratio
Total Return (1 - tax bracket)

8. Holding Period Return
[(1+ NR) / (1 + CCL)] - 1
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
(P1 + D - P0)/P0

9. Debt Service Ratio
(current assets - inventory) / current liabilities
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
g = ROE X b - where b is equal to the retention ratio

10. Social Styles
driving - expressive - amiable - analytical
Tax Deduction * marginal tax rate
Tax Free Yield/(1 - Tax Bracket)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

11. financial planning pyramid
Total Return (1 - tax bracket)
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)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

12. Equivalent Tax Credit
Dollars of coupon interest per year/Bond's current market price
g = ROE X b - where b is equal to the retention ratio
Tax Deduction * marginal tax rate
current assets / current liabilities

13. Domains of a CFP
1 - the payout ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
EBIT/I (Where I = Interest Expense)
Price/Earnings per share

14. Attributes of Effective Advisor communiations
EAT / Sales
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
current assets - current liabilities

15. Types of Leading Responses
current assets / current liabilities
EAT / Sales
Explanatory - Interpretive - Reassuring - Suggestive
Total Long-term Debt / Equity

16. ROE (Return On Equity)
Net Income/Equity
Tax Deduction * marginal tax rate
g = ROE X b - where b is equal to the retention ratio
Total Long-term Debt / Equity

17. Current Yield of a bond

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18. Debt to Equity ratio
Total Long-term Debt / Equity
driving - expressive - amiable - analytical
(P1 + D - P0)/P0
dividends / earnings

19. Cash Ratio
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings Before Interest & Taxes
taxable interest - non-qual. divs - short-term cap. gains
(cash + marketable securities) / current liabilities

20. aka Net Income
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
(cash + marketable securities) / current liabilities
Earnings After Taxes

21. Assets to Equity ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
g = ROE X b - where b is equal to the retention ratio
Total Return (1 - tax bracket)
Total Assets / Equity

22. PEG ratio
Net Income/Equity
Total Liabilities / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
current assets / current liabilities

23. Solvency Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Net Worth/Total Assets
Price Earnings Growth ratio; P/E divided by projected earnings growth
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

24. The retention ratio
EBIT/I (Where I = Interest Expense)
(Mortgage+Debt Repayment)/Net Income
Total Return (1 - tax bracket)
1 - the payout ratio

25. Liquidity Ratio
P*(1+g)/(k-g) P=div per share divided by other div
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets - current liabilities

26. Total Debt to Equity ratio
Dollars of coupon interest per year/Bond's current market price
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Liabilities / Equity
Total Assets / Equity

27. P/E ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price/Earnings per share
(cash + marketable securities) / current liabilities
g = ROE X b - where b is equal to the retention ratio

28. financial life cycle
(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)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Earnings Before Interest & Taxes

29. Current Ratio
Earnings Before Interest & Taxes
Dollars of coupon interest per year/Bond's current market price
current assets / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

30. Book Value (of company stock)
1 - the payout ratio
assets less liabilities - divided by the number of shares of common stock of a company
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sales / Average Total Assets

31. 'normal' ratio
(cash + marketable securities) / current liabilities
current assets - 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)
P*(1+g)/(k-g) P=div per share divided by other div

32. Major CFP Planning Areas
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)
Explanatory - Interpretive - Reassuring - Suggestive
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

33. Present value of a Bond
Price/Earnings per share
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
driving - expressive - amiable - analytical
g = ROE X b - where b is equal to the retention ratio

34. Savings Ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Earnings After Taxes

35. Net Investment Income
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
[(1+ NR) / (1 + CCL)] - 1

36. Working Capital
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 Liabilities / Equity
current assets - current liabilities
driving - expressive - amiable - analytical

37. The payout ratio
current assets - current liabilities
Earnings After Taxes
Net Income/Equity
dividends / earnings

38. Net Cash Flow
Tax Credit/marginal tax rate
Total Long-term Debt / Equity
Sources of Funds-Use of Funds or Money in- Money out
Earnings Before Interest & Taxes

39. Types of Understanding Responses Associated With Active Listening
current assets - current liabilities
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(1/T)(r1+r2+...+rT)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

40. Equivalent Tax Deduction
Sources of Funds-Use of Funds or Money in- Money out
P*(1+g)/(k-g) P=div per share divided by other div
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Tax Credit/marginal tax rate

41. Quick Ratio (aka Acid test)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Total Return (1 - tax bracket)
Total Assets / Equity
(current assets - inventory) / current liabilities

42. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
[(1+ NR) / (1 + CCL)] - 1
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
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

43. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(1/T)(r1+r2+...+rT)
1 - the payout ratio
Total Return (1 - tax bracket)

44. Sustainable Growth Rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
g = ROE X b - where b is equal to the retention ratio
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

45. Gross Investment income
Dollars of coupon interest per year/Bond's current market price
Price Earnings Growth ratio; P/E divided by projected earnings growth
Total Return (1 - tax bracket)
taxable interest - non-qual. divs - short-term cap. gains

46. Net After Tax Profit Margin
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Price/Earnings per share
EAT / Sales
Sales / Average Total Assets