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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. Equivalent Tax Credit
Tax Deduction * marginal tax rate
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Total Return (1 - tax bracket)
Earnings Before Interest & Taxes

2. Major CFP Planning Areas
Earnings After Taxes
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
(P1 + D - P0)/P0
dividends / earnings

3. Assets to Equity ratio
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Sales / Average Total Assets
Total Assets / Equity
Total Long-term Debt / Equity

4. aka Net Income
g = ROE X b - where b is equal to the retention ratio
Earnings After Taxes
(Mortgage+Debt Repayment)/Net Income
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits

5. Liquidity Ratio
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)
Price/Earnings per share
assets less liabilities - divided by the number of shares of common stock of a company
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

6. EBIT
Sales / Average Total Assets
current assets / current liabilities
current assets - current liabilities
Earnings Before Interest & Taxes

7. Net Investment Income
(P1 + D - P0)/P0
Net Worth/Total Assets
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization

8. Current Ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
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
current assets / current liabilities

9. financial life cycle
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income
Dollars of coupon interest per year/Bond's current market price
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

10. Cash Ratio
(cash + marketable securities) / current liabilities
Dollars of coupon interest per year/Bond's current market price
Total Assets / Equity
(P1 + D - P0)/P0

11. Times Interest Earned
Tax Credit/marginal tax rate
EBIT/I (Where I = Interest Expense)
Earnings After Taxes
Total Long-term Debt / Equity

12. After-tax Yield
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)
(cash + marketable securities) / current liabilities
Tax Free Yield/(1 - Tax Bracket)
current assets / current liabilities

13. Book Value (of company stock)
Sources of Funds-Use of Funds or Money in- Money out
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
Total Assets / Equity

14. Attributes of Effective Advisor communiations
taxable interest - non-qual. divs - short-term cap. gains
dividends / earnings
Tax Deduction * marginal tax rate
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness

15. Total Debt to Equity ratio
P*(1+g)/(k-g) P=div per share divided by other div
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity
Earnings After Taxes

16. The retention ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Net Income/Equity
(1/T)(r1+r2+...+rT)
1 - the payout ratio

17. Domains of a CFP
(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
taxable interest - non-qual. divs - short-term cap. gains
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence

18. After-tax Return
Tax Credit/marginal tax rate
(cash + marketable securities) / current liabilities
Total Return (1 - tax bracket)
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)

19. The payout ratio
dividends / earnings
(current assets - inventory) / current liabilities
(1/T)(r1+r2+...+rT)
Price Earnings Growth ratio; P/E divided by projected earnings growth

20. Savings Ratio
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
1 - the payout ratio
Total Assets / Equity
Net Cash Flow+Already Being Saved or Invested/Annual After Tax Income

21. Arithmetic Mean Return; T = Terminal period; good for comparing different investments
Net Income/Equity
(1/T)(r1+r2+...+rT)
Gross investment Income less any deductible other investment-related expenses (must exceed 2% of AGI)
current assets / current liabilities

22. Sustainable Growth Rate
Tax Free Yield/(1 - Tax Bracket)
g = ROE X b - where b is equal to the retention ratio
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
Top: Retirement and Estate - Mid: Growing Investments - Bottom: Guarding Against Uncertainty (Insurance)

23. Net Cash Flow
Earnings Before Interest & Taxes
Sources of Funds-Use of Funds or Money in- Money out
G RETIRE - General Principles - Retirement Planning - Estate Planning - Tax Planning - Investment Planning - Risk Management (Insurance) - Employee Benefits
Total Liabilities / Equity

24. Real Return (inflation adjusted); NR = Nominal Return; CCL = Change in Cost of Living (inflation rate)
Net Income/Equity
Sales / Average Total Assets
[(1+ NR) / (1 + CCL)] - 1
1 - the payout ratio

25. Net After Tax Profit Margin
EAT / Sales
Total Assets / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
1 - the payout ratio

26. Types of Leading Responses
Total Long-term Debt / Equity
driving - expressive - amiable - analytical
Price Earnings Growth ratio; P/E divided by projected earnings growth
Explanatory - Interpretive - Reassuring - Suggestive

27. Gross Investment income
(cash + marketable securities) / current liabilities
taxable interest - non-qual. divs - short-term cap. gains
Tax Deduction * marginal tax rate
(P1 + D - P0)/P0

28. Quick Ratio (aka Acid test)
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
EBIT/I (Where I = Interest Expense)
Total Return (1 - tax bracket)
(current assets - inventory) / current liabilities

29. Debt Service Ratio
(Mortgage+Debt Repayment)/Net Income
Sources of Funds-Use of Funds or Money in- Money out
Net Income/Equity
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

30. PEG ratio
Total Liabilities / Equity
Price Earnings Growth ratio; P/E divided by projected earnings growth
Sales / Average Total Assets
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

31. financial planning pyramid
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)
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

32. Asset Turnover Ratio
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
Total Long-term Debt / Equity
1 - the payout ratio
Sales / Average Total Assets

33. Working Capital
[(1+ NR) / (1 + CCL)] - 1
current assets - current liabilities
Tax Deduction * marginal tax rate
current assets / current liabilities

34. ROE (Return On Equity)
Earnings After Taxes
Net Income/Equity
Continuing - Restatement of content - Reflection of feeling - Clarifying - Summarization
Price Earnings Growth ratio; P/E divided by projected earnings growth

35. 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
Price Earnings Growth ratio; P/E divided by projected earnings growth
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards

36. Social Styles
driving - expressive - amiable - analytical
(P1 + D - P0)/P0
Net Worth/Total Assets
assets less liabilities - divided by the number of shares of common stock of a company

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

38. Holding Period Return
(P1 + D - P0)/P0
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)
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

39. Current Yield of a bond
P*(1+g)/(k-g) P=div per share divided by other div
Net Worth/Total Assets
EGAD CIMP - Establish and define Relationship - Gather Information - Analyze and Evaluate Current Stauts - Develop Recommendations - Communicate Recommendations - Monitor Recommendations - Practice Professional Standards
Dollars of coupon interest per year/Bond's current market price

40. CFP Ethical principles
Net Worth/Total Assets
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
current assets - current liabilities
Price Earnings Growth ratio; P/E divided by projected earnings growth

41. Present value of a Bond
Total Liabilities / Equity
Tax Deduction * marginal tax rate
(Coupon1 /2)/(1+YTM)/2?1 + (Coupon2 /2)/(1+YTM)/2?2 +...+ (CouponT /2)/(1+YTM)/2?n
(Mortgage+Debt Repayment)/Net Income

42. Solvency Ratio
Total Assets / 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
1 - the payout ratio
Net Worth/Total Assets

43. P/E ratio
Net Worth/Total Assets
Price/Earnings per share
current assets / current liabilities
(Liquid Assets/Total Current Debts=Liquid Assets/(Current Liabilities+Annual Loan Payments)

44. 'normal' ratio
1 - the payout ratio
Sources of Funds-Use of Funds or Money in- Money out
(Mortgage+Debt Repayment)/Net Income
P*(1+g)/(k-g) P=div per share divided by other div

45. Equivalent Tax Deduction
IOC FC PD - Integrity - Objectivity - Compentence - Fairness - Confidentiality - Professionalism - Diligence
Price Earnings Growth ratio; P/E divided by projected earnings growth
Tax Credit/marginal tax rate
Total Long-term Debt / Equity

46. Debt to Equity ratio
assets less liabilities - divided by the number of shares of common stock of a company
Unconditional positive regard - Accurate empathy - Genuineness - Self-awareness
Total Long-term Debt / Equity
Earnings Before Interest & Taxes

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CFP: Certified Financial Planner

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