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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. Net Investment Income
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
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
1 - the payout ratio

2. Liquidity Ratio
Earnings After Taxes
Dollars of coupon interest per year/Bond's current market price
g = ROE X b - where b is equal to the retention ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

3. EBIT
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Earnings Before Interest & Taxes
P*(1+g)/(k-g) P=div per share divided by other div
Net Income/Equity

4. Debt to Equity ratio
Total Return (1 - tax bracket)
[(1+ NR) / (1 + CCL)] - 1
Tax Free Yield/(1 - Tax Bracket)
Total Long-term Debt / Equity

5. Major CFP Planning Areas
Total Long-term Debt / Equity
(current assets - inventory) / current liabilities
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
P*(1+g)/(k-g) P=div per share divided by other div

6. financial life cycle
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1
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)
current assets / current liabilities

7. PEG ratio
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Credit/marginal tax rate
taxable interest - non-qual. divs - short-term cap. gains

8. Book Value (of company stock)
assets less liabilities - divided by the number of shares of common stock of a company
Earnings After Taxes
Sources of Funds-Use of Funds or Money in- Money out
Price Earnings Growth ratio; P/E divided by projected earnings growth

9. Types of Understanding Responses Associated With Active Listening
Explanatory - Interpretive - Reassuring - Suggestive
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
[(1+ NR) / (1 + CCL)] - 1
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

10. CFP Ethical principles
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
dividends / earnings
Tax Free Yield/(1 - Tax Bracket)
P*(1+g)/(k-g) P=div per share divided by other div

11. Equivalent Tax Credit
Dollars of coupon interest per year/Bond's current market price
Tax Deduction * marginal tax rate
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Sales / Average Total Assets

12. Asset Turnover Ratio
Sales / Average Total Assets
current assets - current liabilities
(P1 + D - P0)/P0
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

13. Net Cash Flow
Tax Deduction * marginal tax rate
Sources of Funds-Use of Funds or Money in- Money out
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Total Assets / Equity

14. Net After Tax Profit Margin
Total Long-term Debt / Equity
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
EAT / Sales
P*(1+g)/(k-g) P=div per share divided by other div

15. Times Interest Earned
[(1+ NR) / (1 + CCL)] - 1
EBIT/I (Where I = Interest Expense)
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Tax Credit/marginal tax rate

16. Types of Leading Responses
current assets / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive
Total Return (1 - tax bracket)
(P1 + D - P0)/P0

17. Gross Investment income
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
taxable interest - non-qual. divs - short-term cap. gains
current assets - current liabilities
Total Long-term Debt / Equity

18. Quick Ratio (aka Acid test)
(current assets - inventory) / current liabilities
(P1 + D - P0)/P0
Earnings After Taxes
Net Worth/Total Assets

19. Working Capital
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
current assets - current liabilities
Price/Earnings per share
EBIT/I (Where I = Interest Expense)

20. Opportunities in Financial Planning
dividends / earnings
EAT / Sales
Tax Free Yield/(1 - Tax Bracket)
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

21. Sustainable Growth Rate
Total Long-term Debt / Equity
EBIT/I (Where I = Interest Expense)
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
g = ROE X b - where b is equal to the retention ratio

22. Present value of a Bond
EBIT/I (Where I = Interest Expense)
Total Liabilities / Equity
current assets / current liabilities
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n

23. Current Ratio
Sources of Funds-Use of Funds or Money in- Money out
Tax Deduction * marginal tax rate
current assets / current liabilities
Explanatory - Interpretive - Reassuring - Suggestive

24. ROE (Return On Equity)
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
Net Income/Equity
Total Return (1 - tax bracket)

25. Total Debt to Equity ratio
Net Income/Equity
1 - the payout ratio
Total Liabilities / Equity
Total Long-term Debt / Equity

26. Cash Ratio
taxable interest - non-qual. divs - short-term cap. gains
(Mortgage+Debt Repayment)/Net Income
Tax Free Yield/(1 - Tax Bracket)
(cash + marketable securities) / current liabilities

27. Current Yield of a bond
Sales / Average Total Assets
(1/T)(r1+r2+...+rT)
Tax Credit/marginal tax rate
Dollars of coupon interest per year/Bond's current market price

28. Social Styles
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
Tax Deduction * marginal tax rate
(Mortgage+Debt Repayment)/Net Income

29. The payout ratio
Tax Deduction * marginal tax rate
1 - the payout ratio
Total Liabilities / Equity
dividends / earnings

30. Attributes of Effective Advisor communiations
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Sources of Funds-Use of Funds or Money in- Money out
Total Long-term Debt / Equity
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

31. P/E ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
(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
Price/Earnings per share

32. After-tax Return
Dollars of coupon interest per year/Bond's current market price
Total Return (1 - tax bracket)
Earnings Before Interest & Taxes
Tax Credit/marginal tax rate

33. After-tax Yield
(current assets - inventory) / current liabilities
Tax Free Yield/(1 - Tax Bracket)
Net Income/Equity
dividends / earnings

34. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
(cash + marketable securities) / current liabilities
1 - the payout ratio
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

35. Holding Period Return
(P1 + D - P0)/P0
Earnings Before Interest & Taxes
current assets - current liabilities
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)

36. Solvency Ratio
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
Net Worth/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

37. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
(1/T)(r1+r2+...+rT)
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
Sources of Funds-Use of Funds or Money in- Money out

38. Savings Ratio
(P1 + D - P0)/P0
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
(current assets - inventory) / current liabilities
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

39. financial planning pyramid
Net Income/Equity
Total Return (1 - tax bracket)
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
1 - the payout ratio

40. The retention ratio
Tax Credit/marginal tax rate
(P1 + D - P0)/P0
Price/Earnings per share
1 - the payout ratio

41. Equivalent Tax Deduction
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Deduction * marginal tax rate
Tax Credit/marginal tax rate
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

42. Domains of a CFP
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)
Net Income/Equity
dividends / earnings

43. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
EAT / Sales
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
[(1+ NR) / (1 + CCL)] - 1

44. 'normal' ratio
P*(1+g)/(k-g) P=div per share divided by other div
Earnings After Taxes
(Mortgage+Debt Repayment)/Net Income
Total Assets / Equity

45. aka Net Income
Earnings After Taxes
[(1+ NR) / (1 + CCL)] - 1
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
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)

46. Assets to Equity ratio
Total Return (1 - tax bracket)
Total Assets / Equity
Sales / Average Total Assets
(Mortgage+Debt Repayment)/Net Income

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CFP: Certified Financial Planner

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