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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. Major CFP Planning Areas
current assets / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
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)

2. Current Yield of a bond
Price Earnings Growth ratio; P/E divided by projected earnings growth
Dollars of coupon interest per year/Bond's current market price
1 - the payout ratio
driving - expressive - amiable - analytical

3. After-tax Yield
Price/Earnings per share
taxable interest - non-qual. divs - short-term cap. gains
Tax Free Yield/(1 - Tax Bracket)
1 - the payout ratio

4. Net Cash Flow
Sources of Funds-Use of Funds or Money in- Money out
dividends / earnings
(P1 + D - P0)/P0
Tax Free Yield/(1 - Tax Bracket)

5. Equivalent Tax Credit
Explanatory - Interpretive - Reassuring - Suggestive
Tax Deduction * marginal tax rate
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Total Assets / Equity

6. The retention ratio
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Net Worth/Total Assets
1 - the payout ratio

7. PEG ratio
Price Earnings Growth ratio; P/E divided by projected earnings growth
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
dividends / earnings
(cash + marketable securities) / current liabilities

8. Liquidity Ratio
Total Return (1 - tax bracket)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Free Yield/(1 - Tax Bracket)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

9. ROE (Return On Equity)
assets less liabilities - divided by the number of shares of common stock of a company
Dollars of coupon interest per year/Bond's current market price
Net Income/Equity
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

10. Current Ratio
current assets / current liabilities
(Mortgage+Debt Repayment)/Net Income
Dollars of coupon interest per year/Bond's current market price
Sources of Funds-Use of Funds or Money in- Money out

11. Working Capital
current assets - current liabilities
dividends / earnings
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

12. After-tax Return
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Return (1 - tax bracket)
Tax Free Yield/(1 - Tax Bracket)

13. Quick Ratio (aka Acid test)
current assets / current liabilities
(current assets - inventory) / current liabilities
g = ROE X b - where b is equal to the retention ratio
Tax Deduction * marginal tax rate

14. Net After Tax Profit Margin
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Explanatory - Interpretive - Reassuring - Suggestive
EAT / Sales
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

15. Solvency Ratio
Tax Deduction * marginal tax rate
Total Long-term Debt / Equity
Net Worth/Total Assets
Explanatory - Interpretive - Reassuring - Suggestive

16. Equivalent Tax Deduction
Earnings After Taxes
(cash + marketable securities) / current liabilities
Tax Credit/marginal tax rate
EBIT/I (Where I = Interest Expense)

17. Times Interest Earned
P*(1+g)/(k-g) P=div per share divided by other div
EBIT/I (Where I = Interest Expense)
Net Worth/Total Assets
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

18. CFP Ethical principles
driving - expressive - amiable - analytical
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Credit/marginal tax rate

19. Debt Service Ratio
1 - the payout ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income
Earnings After Taxes

20. 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
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1
Net Worth/Total Assets

21. financial life cycle
g = ROE X b - where b is equal to the retention ratio
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)
(cash + marketable securities) / current liabilities

22. Holding Period Return
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
Earnings Before Interest & Taxes
(P1 + D - P0)/P0

23. Types of Leading Responses
Total Liabilities / Equity
Total Return (1 - tax bracket)
Explanatory - Interpretive - Reassuring - Suggestive
(1/T)(r1+r2+...+rT)

24. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Total Assets / Equity
Sales / Average Total Assets
[(1+ NR) / (1 + CCL)] - 1

25. Savings Ratio
taxable interest - non-qual. divs - short-term cap. gains
Sales / Average Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

26. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
taxable interest - non-qual. divs - short-term cap. gains
Tax Deduction * marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
[(1+ NR) / (1 + CCL)] - 1

27. Social Styles
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
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

28. Net Investment Income
EAT / Sales
Tax Deduction * marginal tax rate
driving - expressive - amiable - analytical
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

29. Asset Turnover Ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Tax Credit/marginal tax rate
Tax Deduction * marginal tax rate
Sales / Average Total Assets

30. Present value of a Bond
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(cash + marketable securities) / current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth
dividends / earnings

31. 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
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

32. Attributes of Effective Advisor communiations
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
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)

33. aka Net Income
Earnings Before Interest & Taxes
Earnings After Taxes
EAT / Sales
(P1 + D - P0)/P0

34. Total Debt to Equity ratio
Total Liabilities / Equity
EAT / Sales
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price Earnings Growth ratio; P/E divided by projected earnings growth

35. Types of Understanding Responses Associated With Active Listening
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
EBIT/I (Where I = Interest Expense)
(1/T)(r1+r2+...+rT)
Tax Deduction * marginal tax rate

36. Gross Investment income
Price Earnings Growth ratio; P/E divided by projected earnings growth
taxable interest - non-qual. divs - short-term cap. gains
Dollars of coupon interest per year/Bond's current market price
Total Assets / Equity

37. financial planning pyramid
Price Earnings Growth ratio; P/E divided by projected earnings growth
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 = ROE X b - where b is equal to the retention ratio

38. Debt to Equity ratio
Total Long-term Debt / Equity
g = ROE X b - where b is equal to the retention ratio
EBIT/I (Where I = Interest Expense)
Tax Credit/marginal tax rate

39. Domains of a CFP
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(Mortgage+Debt Repayment)/Net Income
Explanatory - Interpretive - Reassuring - Suggestive
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

40. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
EBIT/I (Where I = Interest Expense)
(P1 + D - P0)/P0
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

41. Cash Ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(cash + marketable securities) / current liabilities
Net Income/Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

42. The payout ratio
Earnings Before Interest & Taxes
Total Return (1 - tax bracket)
driving - expressive - amiable - analytical
dividends / earnings

43. EBIT
[(1+ NR) / (1 + CCL)] - 1
Earnings Before Interest & 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)
Net Income/Equity

44. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
(1/T)(r1+r2+...+rT)
Earnings Before Interest & Taxes
Net Income/Equity

45. Assets to Equity ratio
Tax Free Yield/(1 - Tax Bracket)
Tax Credit/marginal tax rate
Total Assets / Equity
[(1+ NR) / (1 + CCL)] - 1

46. Sustainable Growth Rate
P*(1+g)/(k-g) P=div per share divided by other div
g = ROE X b - where b is equal to the retention ratio
[(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

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CFP: Certified Financial Planner

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